Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Oral Answers to Questions — NATIONAL WAR EFFORT.

MUNITION FACTORIES (HOURS OF WORK).

Rear-Admiral Sir Murray Sueter: asked the Minister of Labour whether he has been furnished with reports as to the extent of absenteeism in munition factories since the introduction of week-end and other forms of overtime working?

The Minister of Labour (Mr. Ernest Bevin): I have no statistics on this matter. It is evident, however, that undue exhaustion, which is one of the causes of absenteeism, must be prevented if production is to be maintained at the maximum, and in order to secure this I am issuing immediately some notes for guidance on "Hours of Work and Maximum Production" to give an indication of the kind of adjustment in the hours of work that should be made. I will have copies placed in the Vote Office as soon as they are available.

Mr. Robert Gibson: Is it clear that there is not as much absenteeism as among landlords and plural farmers?

Mr. Levy: Is my right hon. Friend aware that when these men are away it is generally on a Tuesday or Wednesday, and that they work double-time over the week-end?

Mr. Kirkwood: Did you ever work in a factory in your life?

Mr. Bevin: I would make this appeal to the hon. Member for Elland (Mr. Levy), that I think it is doing untold harm to the country to keep singling out exceptions, especially having regard to the fact that in all the air raids, in all that is going on, the men are sticking it as they are.

Mr. Levy: Is it not in the national interest that if a man wants to take a day off, it should be on a Saturday or Sunday and not on a Wednesday, when the rate of pay is single-time?

Mr. Bevin: I would remind the hon. Member that very often, if men took the Saturday or Sunday off, they might, by that very act, hold up the delivery of aircraft or other things which were needed for the Forces the very next day. The question of when and how they take their time off is one for the management and the union concerned.

Mr. Lawson: Is not the hon. Member showing remarkable ignorance of working conditions?

ALIENS' FACTORIES (CLOSING).

Mr. David Adams: asked the Minister of Labour the number of factories upon the trading estates and elsewhere, opened by aliens, which have been closed and the number which are to contribute to the national effort under strict supervision?

Mr. Bevin: I am making inquiries and will forward my hon. Friend such particulars as may be available, as soon as possible.

Mr. Wilfrid Roberts: Will the right hon. Gentleman make inquiries to find out how many British subjects have lost their employment as a result?

MOBILISATION OF RESOURCES.

Mr. Ellis Smith: asked the Minister without Portfolio, in view of the eagerness of the people to make their contribution in the national effort, when action is to be taken to mobilise the whole resources of the country, increase the supply of materials, and make the pooling of patentee rights and licences compulsory, and, as wide powers are being used to direct workpeople and interfere with their hard-won customs when will the compulsory powers be used to direct material and production in order that the peak can be attained and the people be assured that the maximum effort is being made?

The Minister without Portfolio (Mr. Arthur Greenwood): The Government warmly appreciate the eagerness to which my hon. Friend refers, which makes very much easier their task of mobilising the resources required for the war effort and


has already made possible a very considerable increase in the output of war materials. Under existing legislation any patented invention can be used on proper terms for the purposes of the Crown, and Government Departments can act in this matter either directly or by any contractor duly authorised in writing. The Ministers concerned do not hesitate to use their powers of requisitioning materials, premises and tools wherever such action would be useful.

PRINTING TRADE OPERATIVES.

Mr. R. Gibson: asked the Minister of Labour how many printing trade operatives were placed on munitions work through the Employment Exchanges between 17th June and 11th July, 1940; and how many more have been so placed since the latter date?

Mr. Bevin: For the general figures, I would refer my hon. Friend to the answer which was given to my hon. Friend the Member for North Southwark (Mr. Isaacs) on 18th July. I may add that, of the 935 printing trade operatives placed on munition work through the Employment Exchanges, between 17th June and 11th July, 39 were placed in Scotland. Information as to the number placed since the latter date is not yet available, but it is known that a considerable number have been transferred to munitions work during the last fortnight.

Mr. Gibson: Would my right hon. Friend keep in mind that, owing to the shortage of paper, there will be increased unemployment among printers?

Mr. Bevin: The Printing Trade Joint Industrial Council have a representative body which is dealing with my Department continuously on this matter.

Oral Answers to Questions — MILITARY SERVICE.

CONSCIENTIOUS OBJECTORS.

Major Sir Jocelyn Lucas: asked the Minister of Labour whether, in view of the heavy cost to the State of the conscientious objectors' tribunals, he will see that those objectors, who are in a position to do so, shall be made to pay a fee for the examination, since under the present law the State loses both man and money in the event of a successful appeal?

Mr. Bevin: No, Sir.

Sir J. Lucas: asked the Minister of Labour the number of copies of N.S. 14 that have to be made by a conscientious objector; the number of times that the continuation form has to be filled up; and why it is necessary to have eight copies of the appeal result made and seven filed?

Mr. Bevin: Only one copy of the Application Form N.S. 14 has to be filled up by a conscientious objector. The continuation form is used when necessary for the recording by the chairman of the evidence obtained at the hearing and the findings of the tribunal. Any additional copies required for the use of the members of the tribunal and of others concerned, including the applicant and his representative, are made by the Department. With regard to the last part of the Question, three copies are prepared of the result of an appeal to the Appellate Tribunal, one for the applicant, one for the tribunal records and the third for Departmental record.

Mr. Thurtle: asked the Minister of Labour at whose instance his Department recently appealed for the complete exemption of two young men who had refused to recognise the Military Service Act; and whether, before this action was taken, due consideration was given to the possible repercussions of this official support for ignoring the law relating to military service as laid down by Parliament?

Colonel Burton: asked the Minister of Labour upon what grounds Harold Mayo, of Greenhill Grove, Manor Park, E., and A. S. Porcas, of Dunbar Avenue, Norbury, were excused from military service; what are their ages; are they married; what is their present occupation and remuneration; and whether they will be drafted into some service of national benefit?

Mr. Bevin: These men were registered unconditionally as conscientious objectors by the Appellate Tribunal. The appeal to the Tribunal was made by my Department in accordance with the powers conferred by Section 5 (4) of the Armed Forces Act. Whether or not the decision from which the appeal is made is in favour of the applicant, it is the practice of the Department to exercise these rights of appeal in order to secure a decision from the Appellate Tribunal whenever it


appears to them that a case contains features which requires authoritative determination by the Tribunal. I cannot agree that the Department gave any official support for the ignoring of the law; on the contrary, the action of the Department was in accordance with the procedure clearly intended by the Armed Forces Act and afforded the only means of determining authoritatively the effect of that Act in these particular cases. I understand that both men are between the ages of 21 and 23 and that Mr. Mayo, but not Mr. Porcas, is married. I have no information as to their present occupation or remuneration.

Mr. Thurtle: Is the right hon. Gentleman aware that both these men said they refused to recognise the Military Service Act, and is he aware that his Department, by deliberately supporting them in that attitude, was in fact supporting contempt for the law?

Mr. Bevin: I do not accept the interpretation placed upon the action of the Department. The Department took the case to the only place to which they could take it to get a decision when the men themselves had refused to go.

Mr. Thurtle: Is the right hon. Gentleman aware that by this action he is pointing a way whereby other people can ignore the Act and get away with it?

Mr. Bevin: I do not accept that.

Mr. Thurtle: Will the right hon. Gentleman ask those responsible for taking this action to display a little less concern for young men who ignore the Military Service Act and more concern for the sons of widows?

Major-General Sir Alfred Knox: Why was an official decision taken in the case of these two young men? Why was a special course of action taken?

Mr. Bevin: No special course of action was taken. It would have to be taken in any such case having regard to the Act of Parliament passed by this House and the Section of it which I have quoted.

Mr. Radford: Arising from this Question—

Mr. Speaker: There is a very large number of Questions on the Order Paper.

Mr. Stephen: asked the Minister of Labour the number of cases of conscientious objection to military service considered by the Glasgow tribunal during the months of May and June, respectively; the number of cases in which total exemption was granted; the number of conditional exemptions; and the number of refusals?

Mr. Bevin: During May, the number of cases considered by the Glasgow local tribunal was 191; 45 of the applicants were registered unconditionally as conscientious objectors, 20 were registered as conscientious objectors on condition that they undertook work of a civil character specified by the tribunal, 15 were registered for non-combatant duties in the Forces, and 111 were removed without qualification from the register of conscientious objectors. During the month of June, the tribunal considered 152 cases, and the numbers placed in the four categories mentioned above were 9, 40, 13 and 90 respectively.

TWINS.

Mr. Lewis: asked the Minister of Labour whether any effort is made when twins are called up to draft them to the same regiment?

Mr. Bevin: Twins would, if possible, be called up to the same unit if they notified their wish beforehand and there were no material difference in their qualifications and medical categories. The same would apply to triplets.

REGISTRATION (CASE FOR INQUIRY).

Mr. Glenvil Hall: asked the Minister of Labour whether he is aware that Mr. John Eaton, of Barrow Hills, Long Cross, Chertsey, Surrey, when registering for service, on 9th March last, gave his employment as that of an aircraft fitter and mechanic employed by All Tools, although he was, in fact, shortly before, and is now, employed as a chauffeur; and what action it is proposed to take in the matter?

Mr. Bevin: I am making inquiries into this case and will communicate with my hon. Friend when they have been completed.

Mr. Hall: Will my right hon. Friend expedite the inquiry? I wrote him some time ago, and this matter dates back a long time.

Mr. Bevin: I am afraid I was not in office to receive the letter.

MEDICAL SCHOOL LIBRARY OFFICERS.

Sir Ernest Graham-Little: asked the Minister of Labour whether he will consider the exemption from military service of men of military age in charge of libraries at medical schools when the removal of these officers would result in closure or diminished usefulness of the library in their charge, with consequent injury to medical education and research?

Mr. Bevin: Under the Schedule of Reserved Occupations, a full-time librarian or assistant librarian of an association or institution for research or advanced study is reserved from military service at and above the age of 30.

Sir E. Graham-Little: Will my right hon. Friend take into consideration those below the age of 30, many librarians being quite young men?

Mr. Bevin: I am afraid that it would be very difficult to begin making exceptions.

MEDICAL BOARDS.

Sir E. Graham-Little: asked the Minister of Labour upon what system the recruiting medical boards are constituted; who is responsible for actually drawing up the rotas of doctors who serve on these boards; and whether he is aware that there is considerable dissatisfaction at the existing inequalities in the apportionment of this work between practitioners willing and competent to do it?

Mr. Bevin: The panels from which members of medical boards are drawn are composed of medical practitioners whose names are obtained from lists maintained by the Central Medical War Committee. A medical board normally consists of a chairman and four other members. It is the chairman's duty to convene sessions of the board and to distribute the work as evenly as practicable among the doctors on the panel, which as a general rule consists of from 15 to 20 members. I am not aware of any general dissatisfaction among medical practitioners at the present method of distributing the work of the boards. The recent increase in the work consequent upon the acceleration in the calling-up of men has made it necessary to make more frequent calls on the services of panel members. Additional boards have, however, been appointed, and the total number of panel members now exceeds 3,600.

Sir E. Graham-Little: Will my right hon. Friend note that what is complained of is the unequal distribution of the work, because while some practitioners in a district get five or six boards a week other practitioners, equally competent, get none?

Mr. Bevin: I think that would be a good point for the doctors' trade union to raise.

UNEMPLOYMENT, WALES (AIR-RAID SHELTERS, BRICKLAYERS).

Colonel Arthur Evans: asked the Minister of Labour whether, in connection with the provision of public and district air-raid shelters in Wales, he will arrange with the trade unions concerned to allow unskilled unemployed men to be engaged as bricklayers, so as to complete these shelters at the earliest possible moment?

Mr. Bevin: I am discussing with the two sides of the building and civil engineering industries the best means of making use of the labour available in these industries for all Government building and civil engineering work including the construction of air-raid shelters.

INDIA (POLITICAL SITUATION).

Mr. Sorensen: asked the Secretary of State for India whether he has any further statement to make respecting the political situation in India and conversations between the Viceroy and Indian political leaders; and whether he has reconsidered the Indian proposal of a preliminary central provisional Government, possessing the confidence of Indian democratic institutions?

The Secretary of State for India (Mr. Amery): I have no statement to make at present with reference to the first part of the Question. If, in the second part, the hon. Member is referring to the resolution passed by the Congress Working Committee on 7th July, I can only say that I have, of course, taken note of the whole of that resolution.

Mr. Sorensen: Will there be a statement early, in view of the increasingly serious situation in India; and is there likely to be a discussion at an early date in this House on this very important matter?

Mr. Amery: If there is a desire, there will be a discussion on Indian affairs; but, at the same time, I must point out that I do not admit that the position in India is so serious as the hon. Member implies.

Sir John Wardlaw-Milne: Is my right hon. Friend aware that, unfortunately, there is no body which can be described as the central provisional Government, which would have the approval or authority of both the great races in India?

Mr. Sorensen: Is it not precisely that kind of ambiguous statement just made by the hon. Member that is deserving of discussion at an early date?

Oral Answers to Questions — CIVIL DEFENCE.

AIR-RAID SHELTERS.

Captain Strickland: asked the Secretary of State for the Home Department whether he has given further consideration to the anomaly whereby a compulsorily insured worker can obtain a free air-raid shelter whilst a voluntarily insured worker in receipt of an exactly similar wage and possibly heavier responsibilities has to bear the cost himself; and whether he will amend the Regulation so as to abolish this class distinction?

The Secretary of State far the Home Department (Sir John Anderson): No, Sir. The line of demarcation chosen has, I think, been generally regarded as a fair and sensible one.

Captain Strickland: Is my right hon. Friend aware of the great dissatisfaction and difficulty among people who, while in receipt of very low incomes, are called upon to bear very heavy expenses to provide what is really a State necessity, in times like these?

Sir J. Anderson: The line was drawn after very careful consideration, and the matter has been discussed on several occasions in this House. Unless we adopted a policy of providing free domestic shelters for all, which would have been impossible in the actual circumstances, we were bound to fix some limit of this kind.

Captain Strickland: Surely my right hon. Friend realises that the need for a free issue must depend upon the person's ability to erect the shelter and that that should be a fundamental necessity; and

will he give further consideration to the great hardship that is placed on voluntary contributors who are in receipt of very low incomes?

Sir J. Anderson: The income limit was fixed at the level recognised in the National Health Insurance Act, £5 a week, and it is impossible to reconsider the matter now.

Mr. De la Bère: Is it not because they have no association to fight for them that they get nothing done for them?

MOTORISTS (NIGHT DRIVING).

The following Question stood on the Order Paper in the name of Mr. RADFORD:

19. To ask the Home Secretary whether he will prohibit private motor cars from being on the roads after 11.30 p.m., and so relieve the police and Local Defence Volunteers of some of their work of stopping and questioning motorists, and also render the use of the roads during the night impossible to disloyal persons?

Mr. Radford: This Question should read "pleasure motoring" instead of "private motor cars."

Sir J. Anderson: The answer to the Question on the Paper is: No, Sir. In present circumstances very large numbers of people would have to be exempted from such a prohibition owing to the nature of their occupation, and for this reason I doubt whether the prohibition would in fact achieve the result desired by my hon. Friend.

Mr. Radford: Does not my right hon. Friend recognise that it is quite possible, so long as there was this prohibition of anything but necessary duties, for the reduced number of motorists to be examined in detail by the police and the Home Guard, and their statements examined and substantiated?

Sir J. Anderson: I should be very sorry, in the present circumstances, to impose this invidious obligation.

PERSONNEL (COMPULSION).

Mr. Levy: asked the Home Secretary whether it is proposed to make civilian training for certain branches of air-raid precautions work compulsory; and whether he can now make a statement on the subject?

Mr. Simmonds: asked the Home Secretary whether he is now able to make any specific announcement regarding the completion of the personnel of Civil Defence establishments by compulsory enlistment, where the voluntary principle has proved inadequate?

Sir J. Anderson: I am not at present in a position to add anything to the reply which I gave on 4th July, to a Question by my hon. Friend the Member for Moseley (Sir P. Hannon).

Mr. Levy: Is my right hon. Friend satisfied that air-raid centres are getting their full complement of workers, and, owing to the length of time that has elapsed and they not having succeeded so far, what action does he propose to take?

Sir J. Anderson: If my hon. Friend has any impression that there are large and serious gaps in many areas, I can assure him that that is not the case. There are still gaps that we should like to fill. We are considering how the principle of compulsion could be applied in this case, but the workers are part-time, and we have to remember the effect upon the interests of other vital services.

Mr. Simmonds: Is my right hon. Friend aware that in some centres where there are gaps public opinion is so far in advance of Government policy that there is serious dismay?

Mr. Gallacher: Is it not the case that wherever these gaps exist there are Tory representatives, which show their incapability?

MOBILE CANTEENS.

Mr. Simmonds: asked the Home Secretary whether he is aware that certain persons have inaugurated local funds to provide mobile canteens for the feeding of the civil population during and after air-raids; and whether he will discourage these activities?

Sir J. Anderson: I understand that my hon. Friend is referring to the provision of facilities in the borough of Wands-worth. I am informed that one mobile canteen has been provided for Civil Defence volunteers and that an appeal has been made for funds for another. I am not aware of any grounds on which it would be desirable to discourage these public-spirited activities.

INTERNEES.

Mr. Lewis: asked the home Secretary whether his attention has been called to the case of the internment of Mr. Emilio de Filippis, who has been employed for some eight years in a key position in a business in Colchester, and whose employers are prepared to enter into any undertaking the authorities may require as to Mr. de Filippis' movements in the event of his being allowed to return to his work; and whether, having regard to the fact that his continued internment will necessitate the discharge of some 90 workpeople at present employed by the firm, he will allow Mr. de Filippis to return to his work in Colchester?

Sir J. Anderson: Yes, Sir. I was satisfied after inquiry that the release of this man would be in the national interest, and I gave instructions that he should be released as soon as the necessary arrangements could be made.

Mr. Sorensen: asked the Home Secretary whether for the fuller information of public opinion and the allaying of needless distress, he will assure friendly aliens and refugees from Nazi oppression now interned or to be interned, that internment need not be interpreted as a reflection on the sincerity of their sympathy with and support for the British cause?

Sir J. Anderson: I have already taken steps to give an assurance in the sense suggested by my hon. Friend, and the terms of that assurance were published in the Press yesterday.

Mr. Sorensen: Is the right hon. Gentleman aware that that assurance will give great satisfaction to the numerous refugees in this country and will do something to assure certain sections of the public that these people are, in fact, not aliens hostile to this country?

Sir J. Anderson: I am very glad that that is so.

Mr. Silverman: Could the right hon. Gentleman add to what he has said an assurance that in dealing with this class of aliens they will not be referred to as enemy aliens merely on the ground that they come from Germany?

Sir J. Anderson: I am afraid that I cannot ignore facts.

Mr. R. J. Taylor: Would the right hon. Gentleman say that friendly aliens who have been interned and who have two or three sons in the British Army will receive special consideration?

Sir J. Anderson: I would certainly regard that as a consideration to which due weight should be given.

Mr. Wedgwood: asked the Home Secretary how many non-Aryan aliens are now interned under categories A, B and C; how many have been deported of each variety to Canada or Australia; how many have been released since the sinking of the "Arandora Star;" and what further steps he proposes to take?

Sir J. Anderson: It has never been the policy of His Majesty's Government to discriminate between aliens on the basis of creed or race; and statistics distinguishing between so-called Aryans and non-Aryans are not, therefore, available. As regards the last part of the Question, I would refer my right hon. Friend to the statement which I made in answer to Questions on Tuesday.

Mr. Wedgwood: Is not the principal charge against the Government that they have always failed to distinguish between enemy aliens who are Aryan and those who are non-Aryans? Is it not possible even now for the Department to turn over a new leaf and distinguish between those two types of internees? As regards the "Arandora Star," is the right hon. Gentleman aware that the list of those who sailed on the "Arandora Star" and who perished on the "Arandora Star," murdered by the Nazis—

Mr. Speaker: The right hon. Member must not make a speech.

Mr. Wedgwood: I want to ask my second Question, Mr. Speaker.

Mr. Speaker: The right hon. Member was making a speech.

Mr. Wedgwood: May I ask a question then? When will the list of those on the "Arandora Star," which was promised to be put in the Library, be there?

Sir J. Anderson: In reply to the first part of the question, the right hon. Gentleman has surely been mistaking two separate matters. The Department has always endeavoured to distinguish between enemy aliens who are refugees

from Nazi oppression and others, but the Department has never distinguished, and I should be very sorry if it should try to distinguish, between those who were called Aryan and those who were called non-Aryan.

Mr. Wedgwood: What about the "Arandora Star"?

Sir J. Anderson: I will send the right hon. Gentleman a reply to that Question. I cannot give it to him now.

Sir Herbert Williams: asked the Home Secretary whether his attention has been drawn to the growing apprehension as to the effect on our war effort of the internment of refugees from Nazi oppression; and will he take immediate steps to adopt a policy more in accord with the British sense of decency and dignity?

Sir J. Anderson: I would refer my hon. Friend to the full statement which I made in answer to Questions on Tuesday.

Miss Rathbone: asked the Home Secretary how many interned aliens have appealed personally or through others for release from internment; how many of these appeals have been granted or rejected; and whether, in view of the long delays that have occurred in dealing with these appeals, he will strengthen and expedite the machinery for deciding on them, and will make public the grounds on which he is prepared to consider release?

Sir J. Anderson: No statistics are available, but appeals for release have been made by or on behalf of a very large proportion of the aliens who have been interned, and in many cases a number of communications are received about the same individual. The staff of my Department has been strengthened to deal with the great increase in the correspondence. I have already undertaken to publish as soon as possible a statement of the categories of persons eligible for release and of the procedure to be followed in making application for their release.

Miss Rathbone: Does the right hon. Gentleman realise that the sooner he publishes that statement the better, because that would prevent his getting applications which have no grounds for success?

Sir J. Anderson: That argument certainly appeals to me.

Rear-Admiral Beamish: Will the right hon. Gentleman convey to these aliens that they can perform no higher service to this country than to compare their lot with that of our own dead, our wounded, our missing and prisoners, and of the men of our own Forces, who have fought, and are fighting, their battles?

Captain Vyvyan Adams: Does the right hon. Gentleman know of the suicides which have taken plase in these internment camps?

Miss Rathbone: asked the Home Secretary whether he is aware that the fact that aliens' internment camps had been hitherto administered by the War Prisoners' Department of the War Office has led to much anxiety as to their status among interned refugees and other friendly interned aliens, and especially to a few lest their names might be communicated, as those of war prisoners are, through some medium to the German Government; and will he, therefore, make a statement defining the status and relieving the fears of these internees in these respects?

Sir J. Anderson: The fact that it has been decided to transfer to the Home Office the responsibility for administering the camps for civilian internees should reassure those who are interned in them that they are regarded as civilians and not as combatant prisoners of war.

Miss Rathbone: Might we be assured that their names will not be sent to the German Government either through the Swiss Legation or any other intermediary?

Sir J. Anderson: The arrangement by which the names of prisoners of war are communicated to the German Government is not applicable to civilian internees.

Mr. Wedgwood: I want to ask—[Interruption.] Why should I not be allowed to ask a Supplementary Question?

Mr. Speaker: There are 122 Questions on the Order Paper.

Mr. Silverman: asked the Home Secretary whether he will undertake that, until adequate opportunity has been afforded to each internee affected to apply for release from internment on the grounds and by the methods outlined in his recent

announcement, and until such application has been determined, no internee will be deported overseas?

Mr. G. Strauss: asked the Home Secretary whether he will give orders that no further interned Category C aliens, particularly men who have lived in England the greater part of their lives, will be sent to the Dominions until their case has been carefully examined by the new committee he is setting up?

Sir J. Anderson: I should hesitate to give the specific undertakings for which my hon. Friends ask, but I can say that, as at present advised, I do not propose that any civilian internees should be sent overseas unless either they have volunteered to go or arrangements have been made for them to be accompanied, or followed, by their wives and children.

Mr. Silverman: Would the right hon. Gentleman remember, especially in the case of those who have already volunteered, that that agreement was based on the conditions which then obtained and without knowledge of the statement which he made two days ago? In the light of that statement those who formerly agreed might now prefer to remain where they are.

Sir J. Anderson: That consideration will be taken into account.

Mr. G. Strauss: Is the right hon. Gentleman aware that in some camps, at least, considerable pressure is being brought to bear on C class internees?

Sir J. Anderson: Perhaps the hon. Gentleman will give me the source of his information.

Mr. Isaacs: Does the condition permitting wives to accompany aliens sent abroad apply to those already sent whose wives have not been informed?

Sir J. Anderson: Yes, Sir, it does.

RESTRICTIVE REGULATIONS.

Mr. Mander: asked the Home Secretary whether he will consider the advisability of holding consultations with various sections of opinion in this House with a view to amending Regulation 398 dealing with statements likely to cause alarm or despondency in the light of experience gained of its working?

Sir J. Anderson: I do not think I can usefully add anything to the statement on this subject which was made by my right hon. Friend the Prime Minister on Tuesday last.

Mr. Ammon: Does not the right hon. Gentleman realise that this Regulation is being carried out in a way which causes ridicule throughout the country, in view of the way in which many cases are dealt with, and does he not think that it would be better to try and amend it?

Sir J. Anderson: This matter was dealt with by my right hon. Friend.

Mr. Rhys Davies: Has it been brought to the notice of the right hon. Gentleman that many of these cases under the Regulation arise out of political prejudice?

Sir J. Anderson: I think the hon. Gentleman knows that I am at present undertaking a review of the cases.

Mr. Sorensen: asked the Home Secretary how many prosecutions have been instituted since the beginning of the war, respectively, for spreading rumours, for statements likely to cause alarm and despondency, and for speeches or the distribution of leaflets classified as insulting behaviour or likely to cause a breach of the peace; how many of these prosecutions have led to convictions and penalties of fine or imprisonment, respectively; and whether any kind of guidance has been, or will be, issued respecting the refusal of bail and the infliction of imprisonment without the alternative of a fine, particularly respecting the thoughtless but unmalicious acts of young and elderly people?

Sir J. Anderson: As regards proceedings for offences against Section 5 of the Public Order Act, 1936, no statistics are available, and to obtain the information asked for it would be necessary to call on all police forces for a return. I am reluctant to impose this additional burden on the police at a time when they are working under very severe pressure. As regards proceedings for offences against the Regulation of 11th June, dealing with statements calculated to cause alarm and despondency, the number of cases is 74. These cases are being examined for the purpose indicated by my right hon. Friend the Prime Minister in his statement on Tuesday last. In reply to the last

part of the Question, no special guidance has been given to magistrates; but I know that the Director of Public Prosecutions has been careful to discriminate between cases which, in his opinion, could be met by a warning and those of a graver character.

Mr. Sorensen: Does the right hon. Gentleman not feel that it is desirable to send out some sort of recommendation, in view of the number of penalties that have been imposed of a decidedly vindictive and un-British character?

Sir J. Anderson: My Department proceeds always on the assumption that anything in the nature of directions to magistraates should be issued very sparingly. As regards the nature of the offences and the penalties that have been imposed, I think the hon. Gentleman should await the review which is now proposed.

Sir H. Williams: How many of the stories that have been spread to the effect that parachutists have come down have, in fact, been obtained from information in the documents of the Regional Commissioners?

FASCISTS.

Mr. Wedgwood: asked the Home Secretary the total number of members of the British Union of Fascists in Great Britain and Northern Ireland at the beginning of the war; how many of these members have now been interned; and has he any record of the number now employed in Government service?

Sir J. Anderson: I regret that it is not possible to give any of the information for which my right hon. Friend asks except that the number of detention orders made against members or former members of the British Union of Fascists is over 500.

Mr. Wedgwood: Did not the right hon. Gentleman tell me last week that he had the names of those who were Fascists at the beginning of this war? Should I be wrong in suggesting that there were 9,000 of those names, and are they being traced by the Home Office?

Sir J. Anderson: It is true that I indicated to the right hon. Gentleman informally that I understood that the number of persons who had paid their last annual subscription was in the region of 9,000. Steps have been taken to supervise the activities of those persons.

Mr. Wedgwood: How many dangerous people among them have not been interned?

Sir A. Knox: How many Communists have been interned?

AIR-RAID CASUALTIES.

Mr. Simmonds: asked the Home Secretary whether he will arrange that the monthly totals of air-raid casualties shall be published simultaneously with those for road casualties in order to develop a balanced perspective in the country?

Sir J. Anderson: No, Sir. I have considered my hon. Friend's suggestion, but I doubt whether it would be profitable to invite comparison between sets of figures which are not in any strict or logical sense comparable.

Commander King-Hall: asked the Home Secretary whether, in order to do honour to those civilians who became casualties through enemy air action in Great Britain, he will direct that when these casualties are published each month they shall appear as names without addresses in the form of a Roll of Honour of the home front?

Sir J. Anderson: I am fully in sympathy with the object which my hon. and gallant Friend has in mind: but, for reasons which I have explained in a letter which I have now sent to him, I am afraid that his suggestion would not be practicable.

Commander King-Hall: If the theory is that people in some parts of the country might not recognise the names as being those of relatives of theirs, might not the publication of the ages, or possibly the National Registration numbers, remove that objection?

Sir J. Anderson: I think that the danger of causing misunderstanding and mental anxiety owing to similarity of names is only too real.

SHOPS (CLOSING HOURS).

Mr. Rhys Davies: asked the Home Secretary whether he will bear in mind, when preparing regulations governing the closing of shops during the forthcoming black-out, the changed habits of the people in favour of earlier shopping; and whether he will consider favourably making it imperative upon all shops of certain categories throughout the country

to close at the same hour without giving local authorities the right to contract out of the regulations?

Sir J. Anderson: The points mentioned by my hon. Friend have been noted for careful consideration when the occasion arises for framing further regulations governing the closing of shops.

Mr. Davies: Will the right hon. Gentleman bear in mind also the increase in the duties of shopkeepers and their assistants consequent upon the restrictions on packing, etc.?

Sir J. Anderson: Yes, Sir. Everything of that sort will be taken into account.

Mr. Leslie: Is the Minister aware that very few traders took advantage of the increased hours permitted by the local authorities because they found that it would not be a paying proposition, as the people do not want to shop late?

Sir J. Anderson: I will take note of what the hon. Gentleman says.

COMMUNISTS.

Sir H. Williams: asked the Home Secretary whether his attention has been drawn to the fact that opposition at public meetings under the auspices of the Ministry of Information comes mainly from Communists and sympathisers with Communism; and whether he will accord to them the same treatment as that accorded to the Fascist variety of State Socialism?

Sir J. Anderson: According to my information, there has been very little opposition at these meetings, except at some of the meetings held in Hyde Park. There, I understand that there has been some heckling, but nothing requiring police intervention. When anything occurs at a public meeting which calls for action on the part of the police, they carry out their duties without regard to the political opinions of the individuals causing trouble.

Sir H. Williams: Is my right hon. Friend aware that the gentlemen who were heckling me in Hyde Park last Friday were using Moscow-inspired slogans and were obviously opposed to the war effort?

Sir J. Anderson: I know something about that meeting. I think my hon. Friend will admit that he made some rather challenging remarks.

Mr. Gallacher: Would the Minister not provide for the hon. Member's protection by inviting Himmler over here?

Mr. Gallacher: asked the Home Secretary whether he will give the House his reasons for the measures taken to stop the circulation of the Communist party document which advocated the removal of the men of Munich, and the formation of a people's Government?

Sir J. Anderson: The hon. Gentleman's description of the leaflet in question is incomplete. The numerous reports which I received about the resentment aroused by the dissemination of this pamphlet among persons who did not wish to receive it showed that its distribution was likely to lead to breaches of the peace and that it was, therefore, the duty of the police to take action in respect of it.

Mr. Gallacher: Has not the Minister given a solemn assurance that he would not use his very great powers for interfering with the expression of political opinions; and is he not further aware that the two Members who raised the question in this House were until recently notorious for their open, pro-Fascist sympathies?

AMUSEMENTS.

Sir H. Williams: asked the Home Secretary whether his attention has been drawn to the activity of propagandist societies in the direction of exploiting the war for the purpose of suppressing the particular forms of amusements of which they are not addicts; and will he continue to resist this form of political exploitation?

Sir J. Anderson: I agree with my hon. Friend that the Government's emergency powers should be used only for the purpose of securing the defence of the Realm and the efficient prosecution of the war, and not for the purpose of effecting changes in the law which may be advocated on other grounds.

FIREARMS (SURRENDER).

Mr. Mander: asked the Home Secretary whether he is now able to state the decision of the Government with reference to the compulsory surrender of firearms held on certificate, and shotguns, for which a gun licence has been taken out?

Sir J. Anderson: I have discussed this further with my right hon. Friend the Secretary of State for War, and investigation of this proposal has satisfied the military authorities that it is not desirable to proceed with the plan.

Mr. Mander: Is the House to understand from that reply that the Government have all the arms they require?

Sir J. Anderson: Not necessarily, but it has been ascertained that firearms in the possession of individual members of the public are of so many different types and that so few comparatively are of a bore suitable for use by the Home Guard that the labour and inconvenience involved in picking these out and assessing the compensation payable for them would not be justified.

ENEMY ALIENS (AIR-RAID SHELTERS).

Mr. Creech Jones: asked the Home Secretary whether, in view of the restrictions on enemy aliens who have not yet been interned, the regulations will be modified so as to permit those aliens in blocks of flats or houses without air-raid shelters to obtain admission to outside air-raid shelters during prohibited hours?

Sir J. Anderson: The police were instructed on 16th July that proceedings should not be instituted for a breach of the Aliens (Movement Restriction) Order in cases where they are satisfied that the alien was absent from his place of residence merely for the purpose of taking shelter during an air raid and that he returned to his place of residence as soon as possible after the "Raiders passed" signal had been sounded.

Mr. Sorensen: Have there been any instances of prosecution on these grounds?

Sir J. Anderson: I would rather have that Question on the Paper.

POLICE HOUSE VISITS, STAFFORDSHIRE.

Mr. Creech Jones: asked the Home Secretary (1) whether he is aware of the activities of the police in Stoke and other parts of North Staffordshire in visiting the houses of active persons in the adult educational movement and workers' movements; that many of these loyal people are already active in national service, but are placed under public suspicion by such visits and inquiries; and


whether he will instruct the police authorities to exercise more discretion in respect to irresponsible statements which lead to such inquiries;
(2) whether his attention has been drawn to the search by the police of the house of Mr. McEllis, of Audley, Stoke-on-Trent; why the homes of all residing in the house were entered and property taken; what evidence justified this action against loyal and respectable citizens; why Mr. McEllis was searched personally by the police and the private correspondence of him and his wife studied; and why pamphlets of the Workers' Educational Association and branch papers and correspondence were treated as subversive documents, removed and not returned?

Sir J. Anderson: My attention had not previously been called to these cases. I am having inquiries made into the case of Mr. McEllis, and if my hon. Friend will be good enough to let me have particulars about the other cases he has in mind, I will cause further inquiries to be made.

Mr. G. Strauss: Can the right hon. Gentleman say whether there is any central authority which has been authorising or initiating this type of search, which has happened in many parts of the country?

Sir J. Anderson: I am not aware of any such thing.

Mr. Wedgwood: Is the right hon. Gentleman aware that Mr. McEllin—that is his real name—is one of my best supporters [Interruption], and an old friend of whom I entirely approve?

ARRESTED GERMAN, HYDE PARK.

Mr. Radford: asked the Home Secretary what has been done with regard to the German, Fredrich Schweitzer, who was found in the small hours of the morning about a fortnight ago near the powder magazine in Hyde Park and who was remanded for a week for medical observation?

Sir J. Anderson: This man has been dealt with under the Lunacy Act and is now in a mental hospital.

ALIENS (NATURALISATION).

Mr. Radford: asked the Home Secretary whether he will take steps to suspend the naturalisation of aliens until the end of the war?

Sir J. Anderson: As indicated in my reply to the hon. and learned Member for Warrington (Mr. Goldie) on 4th June, the difficulty of devoting time and labour to the necessary investigations has, in itself, necessarily imposed a severe limit on the number of cases which can be dealt with in present circumstances, but there are some applications—including applications from British-born women—which it is in the pubic interest to investigate and, if the inquiries are completely satisfactory, to grant.

CHANNEL ISLANDS.

Mr. Ammon: asked the Home Secretary whether he will make a full statement of the reasons for the evacuation of the Channel Islands without resistance, whereby the inhabitants were left to the mercy of the invaders?

Sir J. Anderson: The reasons were, as already stated, of a purely military character. The decision was taken by the Government in accordance with the advice of the responsible Service authorities.

Mr. Ammon: asked the Home Secretary whether he is aware that the Governor of the Channel Islands was withdrawn on 21st June; that the Channel Islanders who registered for evacuation on 20th June were unable to leave owing to lack of transport; that telephonic communications between the islands and this country were operating on the evening of 29th June; that invasion took place on 30th June and on the morning of 1st July the manifesto of the German command was published in the island Press; and why, with so long notice, better arrangements for evacuation were not made?

Sir J. Anderson: My hon. Friend's suggestion that the Government had long notice of the date on which the enemy would take action is, of course, unfounded. The arrangements for evacuation had to be made in haste and without foreknowledge of the enemy's intentions.


I have no information to confirm his statement that some of those who registered for evacuation were unable to get transport; and I know that from Jersey the number of people who came away was less than the number for whom transport was made available.

Mr. Ammon: Has not the right hon. Gentleman received the information that I sent him setting out the date, which showed that there was plenty of time?

Sir J. Anderson: I think the hon. Gentleman is entirely mistaken. As I told him before, the first enemy attack was made on 28th June. It is perfectly true that actual occupation of the islands did not take place until two days later, but to arrange for evacuation in the intervening period might have put at great peril those for whom transport was being arranged.

Sir Robert Young: Is there any truth in the statement that local officials in these islands tried to prevent or dissuade people from leaving?

Sir J. Anderson: I do not think I can give a categorical reply to that question. There were undoubtedly discussions between the responsible officials in the islands and the people, but what the exact course of those discussions was I cannot say.

Mr. Amman: Did not the right hon. Gentleman receive a copy, which I sent to him, of the official publication which was issued by the Bailiff of the islands intimating that there would be official evacuation?

Sir J. Anderson: I have been looking out for such a communication, but it has not reached my hands.

Mr. Ammon: I am surprised at that. I give notice that I will raise this matter at the earliest opportunity, because I sent to the right hon. Gentleman all the information I had, and he has had it some days.

Sir J. Anderson: It has not actually reached my hands.

Mr. Ammon: Is this an indication of what is happening in Government Departments? I sent it to the right hon. Gentleman last Thursday. I went to another Department on a similar matter after I had given a fortnight's notice,

and they produced a letter then which the Minister had never had. That is what happens.

At the end of Questions—

Mr. Ammon: On a point of Order, Mr. Speaker. What protection is there for a Member of this House when he is flatly contradicted by a statement by a Minister? We heard recently that the Home Secretary said he had not received a statement from me, but two minutes after that I had a letter from him stating that the statement was received on 18th July.

Sir J. Anderson: What I told the hon. Gentleman was perfectly correct. I said it had not come into my hands. It may have reached my office.

Mr. Ammon: The letter says, "Sir John Anderson asks me …"

EXIT PERMITS.

Mr. J. J. Davidson: asked the Home Secretary how many exit permits for hon. Members to leave this country were granted for private business reasons or Government business reasons, respectively; and for what period of time the permits applied?

Sir J. Anderson: The grant of exit permits to Members of the House of Commons has not been specially noted in the records of the Passport and Permit Office, and I regret that the information asked for by my hon. Friend could not be obtained without undue labour.

Mr. Davidson: Does not the right hon. Gentleman think it necessary to make those inquiries in the national interest and in view of the indignation aroused because these permits were issued to Members of Parliament, and can he say at least for how long those permits are allowed and when he expects those Members to return to their duties?

Mr. Wedgwood: Is there any indignation at these Members leaving this country in the course of business?

Sir J. Anderson: I am aware that there has been comment on one or two cases. The number of permits which have to be dealt with by the Permit Office runs into tens of thousands, and, therefore, to get an exact figure it would be necessary to go through all those records.

Mr. Davidson: Would the right hon. Gentleman keep in mind that my Supplementary Question was made from observations from the working class, with whom the right hon. Gentleman has very little contact?

Mr. Davidson: asked the Home Secretary when the exit permits were issued to Gracie Fields, a well-known variety artiste, her husband, a well-known Fascist, and her pianist, Mr. Davis; and why these individuals were allowed to take with them amounts greatly in excess of the stipulated sum for persons leaving this country?

Sir J. Anderson: Exit permits were granted to Miss Gracie Fields and her husband on 28th May, and to her accompanist on 13th June. As regards the second part of the Question, I have made inquiries and am informed that no permission was sought or obtained to take out more money at this time than could be taken without formality.

Mr. Davidson: Is the right hon. Gentleman aware that Mario Bianchi was actively associated with the movement for sending collections to assist the Italian War Fund, and can he say exactly how much was taken out by those people in money and in jewellery?

Sir J. Anderson: Any question regarding the taking of money out of the country should be addressed to the representative of the Treasury.

Mr. Davidson: In view of the unsatisfactory reply of the right hon. Gentleman, I give notice that I intend to raise this question at the first available opportunity.

Dr. Little: asked the Home Secretary whether he will issue instructions to the effect that all Northern Ireland people in Great Britain making applications for travel permits should apply for same through the Northern Ireland office, Cockspur Street, London?

Sir J. Anderson: I assume that my hon. Friend has in mind the grant of exit permits to enable persons to travel from this country to Northern Ireland. Such permits can be issued only by the Passport and Permit Office which, I understand, works in close touch with the Northern Ireland office in all cases where the applications are made by persons from Northern Ireland, but I do not

think that it would be for the convenience of such persons if they were required to make their applications through the Northern Ireland office instead of to the Passport and Permit Office direct.

Dr. Little: Is my right hon. Friend aware that we have this, office here in London for that purpose, and that I and my colleagues from Ulster cannot possibly answer the letters we are receiving? As the people here do not know where to apply, I hope that my right hon. Friend will make it clear where they should apply.

SILICOSIS.

Sir Francis Fremantle: asked the Home Secretary whether the whole medical staff of the Home Office was transferred to the Ministry of Labour, and on whom does he now depend for medical advice in dealing with the problem of silicosis?

Sir J. Anderson: For the purposes of the administration of the Factories Act, the medical inspectors of factories were transferred to the Ministry of Labour at the beginning of this month, together with the rest of the Factory Department of the Home Office; but they are still available to advise me on workmen's compensation questions relating to silicosis and other industrial diseases.

ART EXHIBITION, HAMPSTEAD.

Mr. W. Roberts: asked the Home Secretary why the Everyman Cinema, Hampstead, was directed not to permit the use of its premises for an exhibition of Chinese and English paintings from 14th to 28th July?

Sir J. Anderson: I am not aware that any such direction was given, and I understand that the exhibition opened on 14th July and is still being held.

Mr. Roberts: Is it not a fact that representations were made in the name of the Home Office or of some other Department of the Government to prevent the opening ceremony taking place?

Sir J. Anderson: An opening ceremony is another matter, but I know of no representations that have been made.

WAR AIMS.

Mr. Denman: asked the Prime Minister whether, in reply to Hitler's assertion that this war must result in the annihilation of Germany or Britain, he will again make it plain that we are fighting and will continue to fight for a peace which, while showing that German aggression has not paid and restoring liberty to those peoples whose lands have been invaded by the Germans, will not seek to deny to the German people their own freedom within the framework of a secure European order?

The Lord Privy Seal (Mr. Attlee): Yes, Sir. The idea expressed by my hon. Friend is implicit in the statements which have been made as to the policy and aims of His Majesty's Government, and most recently in the speech broadcast by my Noble Friend the Secretary of State for Foreign Affairs, where he said that our aim is to see Europe as a free association of independent States.

Mr. MacLaren: Does that mean European free trade?

EOUALITY OF SACRIFICE IN WAR-TIME.

Mr. Kirkwood: asked the Prime Minister whether, in view of the necessity that all the people should feel that the burdens of this war are to fall equally upon rich and poor alike, he will give time for the House to debate the Motion standing on the Order Paper in the name of the hon. Member for Dumbarton Burghs relative to Equality of Sacrifice in War-time?
[That this House regrets that, while hundreds of thousands of young men from all quarters of Britain have willingly sacrificed comfortable jobs and large wages for the dangers and hardships of military service at 2s. per day in their country's interest, landowners are still compelling the Government to pay large sums for the land required for aerodromes, camps. etc., necessary for the Government's war effort and calls upon the Government to implement its policy of equal sacrifice for all classes of the population either by ceasing to pay the market price for land required by the nation or by paying the full market price for the services of the young men who also have been required for the service of the country.]

Mr. Attlee: I am afraid that I cannot hold out any hope that time can be found for discussion of the Motion standing in the name of my hon. Friend.

Mr. Kirkwood: Is the right hon. Gentleman aware that if he will do away with the Recess, there will be plenty of time to discuss this matter and other things which are coming on?

Mr. Attlee: My hon. Friend will remember that I have said that no decision has been come to with regard to a Recess.

Mr. Kirkwood: Seeing that the working-class, whom we on this side really represent, are called upon to work all the hours that God sends, and that their holidays are being dispensed with, is it too much to suggest to the right hon. Gentleman that time should be given to discuss this Motion, and that, in order that that may be possible, we should do away with the idea of having a Recess? That would be in conformity with the conditions existing for the workers. Is that not worth an answer?

Mr. Lees-Smith: Will my right hon. Friend take note that some of my hon. Friends will raise the point of this Motion in the ordinary course of the Business of the House?

ANGLO-JAPANESE AGREEMENT.

Mr. Gallacher: asked the Prime Minister whether he will provide an opportunity for a discussion on the decision to close the Burma Road?

Mr. Attlee: Perhaps the hon. Member would be good enough to await the statement on Business which I propose to make at the end of Questions.

PARLIAMENTARY SECRETARY TO THE TREASURY.

Captain Vyvyan Adams: asked the Prime Minister whether, to effect economy, he will now limit the tenure of the Parliamentary Secretaryship to the Treasury to the hon. Member most recently appointed to that office?

Mr. Attlee: No, Sir.

Captain Adams: Can my right hon. Friend say how it comes about that the right hon. and gallant Gentleman the Member for Rugby (Captain Margesson) is still allowed to flourish like a green bay-tree; and may I also ask how can that


right hon. and gallant Gentleman possibly require support for a Government whose coming into existence he did his best to prevent?

MINISTER OF INFORMATION.

Mr. Granville: asked the Prime Minister whether the retention of the system of voluntary Press censorship and administration of Defence Regulation No. 3 by the Ministry of Information, instead of the Service Departments, now represents the considered policy of the War Cabinet; and whether, in order to ensure closer co-operation and avoid further misapprehensions, the Minister of Information will be made a member of that body instead of merely attending their meetings?

Mr. Attlee: The arrangement set out in the first part of the Question represents the considered policy of the War Cabinet. My hon. Friend will appreciate that the administration by the Ministry of Information of Defence Regulation No. 3 is limited to cases of infringement of that Regulation by the Press. The answer to the second part of the Question is that it is not proposed to make any change at the present time.

Mr. Granville: If my right hon. Friend thinks it undesirable to increase the War Cabinet, does he not agree that it is important that this very important office should be in the hands of somebody who has had War Cabinet experience; and, furthermore, will he take into consideration the fact that, while the country is very satisfied with the Prime Minister, it is far from satisfied with the Ministry of Information?

Oral Answers to Questions — AGRICULTURE.

LAND WORK (CONSCIENTIONS OBJECTORS).

Sir A. Knox: asked the Minister of Agriculture (1) what steps he is taking to find work on the land for men registered as conscientious objectors on condition that they undertake such work; how many men have been so registered; and how many of them have been found work;
(2) whether he has considered the possibility of employing gangs of conscientious objectors under the general supervision of the war agricultural committees to increase food production?

The Minister of Agriculture (Mr. R. S. Hudson): I would refer my hon. and gallant Friend to the reply given to him by my right hon. Friend the Minister of Labour on 11th July and to that given to my hon. Friend the Member for Devizes (Sir P. Hurd) on 4th July. All that can be added at the moment is that 868 conscientious objectors registered on condition that they take up agricultural work had found employment in agriculture up to the end of June.

Sir A. Knox: How many of the men who have been told off to get employment in agriculture are still waiting for employment in agriculture and are remaining at their own jobs?

Mr. Hudson: I cannot say.

Mr. Stephen: Will the right hon. Gentleman consider employing gangs of retired generals in agriculture?

Sir A. Knox: The right non. Gentleman has given no answer to Question No. 54.

Mr. Hudson: I answered it with Question No. 53.

Sir A. Knox: But you have not given an answer. Will you consider the possibility of carrying out that suggestion?

Mr. Hudson: The answer was given to the hon. Member for Devizes when I said that certain county committees were already doing so.

WEEDS (DESTRUCTION).

Mr. De la Bère: asked the Minister of Agriculture whether he will draw the special attention of the county agricultural war committees to their powers to control weeds, whereby they can compel occupiers of the land to destroy weeds, and if they fail to comply they can cause proceedings to be taken?

Mr. Hudson: I have already drawn the special attention of the committees to the question of giving directions to occupiers of land under Regulation 62 of the Defence Regulations, requiring them to destroy weeds on their land.

Mr. De la Bère: Is my right hon. Friend aware that nothing has been done, or is being done, about this matter, and will he emphasise what he has already said again in view of the urgent importance of this matter in the national effort? Will my right hon. Friend do that again? May I not have an answer, Mr. Speaker?


The right hon. Gentleman has had four Questions, and he cannot answer one of them.

CREDIT FACILITIES.

Mr. Granville: asked the Minister of Agriculture whether he is aware that numbers of small arable farmers in East Anglia are without sufficient liquid capital to enable them to assist fully the war effort for increased food production; and will he therefore consider introducing interest-free loans against crop value, in view of the fact that these producers are unable to obtain further accommodation at the joint stock banks?

Mr. Hudson: I am aware that in a certain number of cases farmers are short of capital. The Agricultural Requisites Assistance Scheme was introduced in order to meet the needs of such farmers, who can obtain assistance from the county war agricultural executive committees both under this scheme and in other ways.

Mr. Granville: Does my right hon. Friend realise that these small farmers are at the present time mortgaged to the banks and that the facilities he is offering at the present time do not help their problem, and will he give the House an assurance that they will not be turned off their farms through lack of capital?

Mr. Hudson: I am not satisfied that the means at the disposal of county executive committees to help these men have been utilised.

Mr. De la Bère: Cannot we have an end put to this great pretence? Nothing is being done, and my right hon. Friend only sits there and laughs.

SUBSTITUTE FEEDING-STUFFS.

Captain Sir Ian Fraser: asked the Minister of Agriculture whether research is being undertaken by his Department or by others, with a view to providing, from home-grown agricultural products, substitute poultry food such as dried potato meal, ensilage and sugar-beet pulp?

Mr. Hudson: The results of research into the value in poultry feeding of substitute feeding-stuffs, including those named by my hon. and gallant Friend, are recorded in "Growmore" Leaflet No. 14, one of the war-time publications of my Department, of which I am sending him a copy. I may add that poultry nutrition research conducted since the war has been directed mainly to this subject.

Sir I. Fraser: Is my right hon. Friend aware that on the Continent, particularly in Germany, very great success has been attained by this substitute feeding, and will he see whether similar research and results can be obtained here?

Mr. Hudson: My hon. and gallant Friend will find that referred to in the leaflet of which I am sending him a copy.

ARMED FORCES (TREATING).

Mr. R. Gibson: asked the Home Secretary whether he has considered the letter sent to him by leading churchmen of the Church of Scotland and of Non-conformist denominations in Scotland, Presbyterian and Independent, and by leaders of the Salvation Army, the Church of Scotland Women's Guild, the Young Men's Christian Association and the Young Women's Christian Association urging the gravity of the dangers arising from the treating of His Majesty's Forces and their auxiliary services to alcoholic liquors, and appealing to the Government to promulgate a no-treating order in respect thereof; and what steps he is to take in connection therewith?

Mr. Lipson: asked the Home Secretary whether he will give further consideration to the imposition of a no-treating order?

Sir J. Anderson: I have considered the letter referred to by my hon. and learned Friend. As I have said on previous occasions, I am watching the situation carefully, but my present information does not indicate that there is a case for prohibiting treating.

Mr. Gibson: As this matter is one of some concern North of the Border, will my right hon. Friend make an order applicable to Scotland?

Sir J. Anderson: I think some Questions were put to my right hon. Friend the Secretary of State for Scotland on that matter.

Mr. Lipson: May I ask my right hon. Friend whether he will obtain reports from police authorities in towns where there are military camps, and also from medical hospitals where soldiers are being treated, so that he can consider whether they justify his statement?

Sir J. Anderson: I have received certain reports, but the representations made to me have come mainly from temperance societies.

Mr. Davidson: Will the right hon. Gentleman bear in mind that Scotland will not welcome any imposition which is not placed on any other part of the country?

FRENCH SHIP "MEKNES" (ENEMY SINKING).

Mr. Ammon: (by Private Notice) asked the First Lord of the Admiralty whether he can make a statement concerning the sinking of the French Ship "Meknes."

The First Lord of the Admiralty (Mr. A. V. Alexander): This vessel was one of a number being used for the repatriation of French naval officers and men who wished to return to unoccupied France in accordance with the terms of the Armistice. The French Government's representative had been informed in advance of our intention to repatriate these men in French ships. The "Meknes" left Southampton yesterday for Marseilles with nearly 1,300 officers and men on board. Special care had been taken to make her neutral character apparent. She was flying the French flag, and had French colours painted on deck and sides. At night she was fully illuminated and had her navigation lights burning. According to reports so far received, she was stopped by an enemy motor torpedo boat, which fired on her without warning, at about 10.30 p.m. last night. Apparently the passengers and crew were then given five minutes to take to the boats, but during this interval the motor torpedo boat fired a fresh burst every time the "Meknes" tried to signal her name. She was then torpedoed, and sank in four or five minutes.
I have just heard that the German High Command admit responsibility for this sinking in a communiqué which states
In an attack off the South Coast of England one of our speed boats off Portland sank a large enemy merchant ship of 18,000 tons by a torpedo.
Immediately upon the receipt of her distress signals British naval units and aircraft were ordered to proceed at once

to the scene, and I am happy to say that so far about 1,000 survivors are reported to have been saved. It is too early as yet to tell for certain how many Frenchmen have lost their lives in this deliberate and callous attack on a ship whose non-belligerent character was so obvious. I fear, however, that the number of deaths may be as many as 300. I am sure that the House will wish me to express our deep sympathy with the dependants of any who may have fallen victims to this latest example of German methods of conducting war at sea.

Mr. Davidson: May I ask the Lord Privy Seal whether every step will be taken by the War Cabinet to see that the French people are fully informed of this outrage?

Mr. Attlee: Certainly, Sir.

BUSINESS OF THE HOUSE.

Mr. Lees-Smith: Will the Lord Privy Seal state the Business for next week?

Mr. Attlee: The Business for next week will be as follows:
Tuesday—Second Reading of the Consolidated Fund (Appropriation) Bill. A Debate on foreign affairs will take place. I understand that it is desired that that should take place in Secret Session.
Wednesday—Report stage of the Budget Resolutions.
Thursday—Consideration of Amendments to the Emergency Powers (Defence) (No. 2) Bill, which are expected to be received from another place. Second Reading of the Agriculture (Miscellaneous War Provisions) (No. 2) Bill, and Committee stage of the necessary Money Resolution.

Mr. Lees-Smith: With regard to Tuesday's Secret Session, will the Lord Privy Seal endeavour to ensure that Ministers who are in charge of Departments under discussion will be present regularly throughout the Debate and, as far as possible, one or two Cabinet Ministers, as, since there is no report, without the presence of Ministers to whom we are addressing our observations, a Secret Session becomes largely valueless?

Mr. Attlee: Every effort will be made to see that there is a Minister of the Department on the bench. The right hon. Gentleman will realise that on foreign affairs there is only one Minister in the House, but otherwise other Ministers will attend, and, as far as possible, Cabinet Ministers will be present. If a Cabinet Minister is not there for a few minutes, he will take upon himself to inform himself from other Ministers on the bench of what has transpired in his absence.

Mr. Wedgwood: Why should the Debate be secret?

Mr. Granville: Is it the intention to have a statement in Public Session by the Prime Minister and for the remainder of the Session to be secret, or is it the intention of the Government to have the whole Debate secret?

Mr. Attlee: The Government are perfectly prepared to have the Debate in Public or in Secret Session, but efforts have been made to ascertain the general view of the House, and it seems to be the predominant desire that the Debate should take place in Secret Session in order that Members might state their cases fully and the Government might make the fullest possible reply.

Sir Percy Harris: Would it be possible to have part of the Session in public and part in private?

Earl Winterton: Will the right hon. Gentleman give consideration—I do not ask for an answer now—to a request proffered by several friends of mine that there should be at some early date a statement on the question of the contributions of the Colonial Empire and India towards the war effort, both in material and personnel?

Mr. Attlee: Certainly, Sir.

Mr. Cocks: What method was adopted to obtain the views of Members with regard to a Secret Session? It has never come before Members of our party.

Mr. Attlee: It is necessarily not possible to ask every Member of the House what his view is. The usual method was adopted of asking representatives of groups of Members for their views.

Mr. Mander: Does the right hon. Gentleman not think it desirable that the

House should have some further opportunity of showing its whole-hearted support for the attitude of the Government towards the Nazi peace offensive?

Mr. Silverman: Will the Lord Privy Seal bear in mind that there is a considerable section of the House who are not of opinion that next Tuesday's Debate should be in secret, that there is in the country a growing feeling of distrust about the frequency of these Secret Sessions, and that especially on such a subject as next Tuesday's Debate a Secret Session might be open in the country to the worst possible construction?

Mr. Attlee: The hon. Member will realise that, in making that statement, he has given his view. I have endeavoured in the usual way to collect the views in general of the House, and it has been represented to me that the majority of Members think that on this particular subject at this particular time it would be more satisfactory to have a Debate in Secret Session. This is not the decision of the Government wishing to have a Secret Session. The Government are perfectly prepared to have a public Debate or a secret one. They are endeavouring to meet the general wishes of the House of Commons.

Mr. Gallacher: Does the right hon. Gentleman's answer to my Question earlier on mean that there will be a further statement by the Government on the reasons for closing the Burma Road?

Mr. Attlee: My reply to the hon. Member was that there will be an opportunity of discussing the whole matter on Tuesday. He can, of course, put down a Question and get a fuller reply if he likes.

Mr. Kirkwood: Will the right hon. Gentleman try to give the House an opportunity of discussing the Motion in my name?

Mr. Attlee: The hon. Member will realise that there are opportunities in the Debates on the Budget Resolutions and the Finance Bill to discuss the general points that he puts. Perhaps he will consult with his friends and see whether there is a general desire that the matter should be discussed on a particular day.

Captain V. Adams: When does the right hon. Gentleman hope to be able to come to a decision as to whether or not we shall have a Recess?

Mr. Attlee: I am afraid I am not in a position to say at present.
Resolved,
That this House, at its rising this day, do adjourn till Tuesday next."—[Mr. Attlee.]

Orders of the Day — WAYS AND MEANS.

Considered in Committee [Progress, 23rd July].

[Sir DENNIS HERBERT in the Chair.]

Orders of the Day — NATIONAL DEFENCE CONTRIBUTION.

Question again proposed,
That the law relating to the National Defence Contribution be amended (as respects all accounting periods beginning on or after the first day of April, nineteen hundred and thirty-nine, and so much of any accounting period beginning before that date as falls on or after that date) so as to disallow deductions in certain cases in respect of interest, annuities and annual payments, and in respect of payments under certain contracts or arrangements relating to indemnification in respect of war damage."—[Sir K. Wood.]

4.0 p.m.

Mr. Lees-Smith: I think it would help us if it were made clear to the Committee how much time the remainder of this Debate is expected to occupy. I understand that it is proposed to take the consideration of the Workmen's Compensation (Supplementary Allowances) (No. 2) Bill at the conclusion of this Debate. The suggestion has been made that this Debate should continue until about seven o'clock this evening, after which it is intended to proceed with the Committee stage of the Measure to which I have referred.

The Lord Privy Seal (Mr. Attlee): I think it is the general desire of hon. Members to conclude the Debate on the Budget Resolutions by about seven o'clock this evening, and to proceed then with the consideration of the Workmen's Compensation (Supplementary Allowances) (No. 2) Bill.

4.2 p.m.

Mr. Loftus: When we adjourned last night, I was discussing the question of whether the defences proposed by the Chancellor of the Exchequer were adequate to prevent all danger of inflation. The Chancellor pointed out that the gap between the amount of taxation raised and the amount of the national expenditure would be £2,100,000,000. I think it will be at least that sum, and it may well he more for these reasons. In the first place, war expenditure may

rise considerably, as my right hon. Friend pointed out. In the second place, there will, I think, be a great increase in civilian expenditure due to the war. For instance, I warn my right hon. Friend that during the coming months substantial grants are bound to be made to municipal and other local government authorities in what are called the evacuation areas. There is a third point. I am a little doubtful about the yield or rather the collection of Income Tax and Super-tax next January. We must realise that many businesses and many individuals were prosperous in the year which ended on 30th March and that they are assessed on the profits of that year, although during the past year they have made heavy losses and in some cases have lost capital as well as profit, and many will find difficulty in meeting their tax obligations in January.
Assuming the Chancellor's estimate of £2,100,000,000 to be correct, my right hon. Friend pointed out that in order to bridge that gap, he relied on three resources. The first is the realisation of American securities in gold. I do not place the capacity of the United States to absorb these securities and gold at a higher rate than £400,000,000 or at most £500,000,000 a year. The second resource on which my right hon. Friend relies, is the utilisation of Dominion and Colonial balances left in London, but that is a purely temporary resource. I would suggest to my right hon. Friend that that temporary help might be turned into a permanent help if the Dominion Governments of Australia and New Zealand used those balances in London to cancel portions of the debt owed by the Dominion Governments to Great Britain. The third resource, of course, is borrowing. I think that there is a gap of at least £1,500,000,000 which we must close by borrowing. The whole point is this. If we can raise that figure, which I think is at least £1,500,000,000 but may be more, out of the genuine savings of the people we avoid inflation. If we cannot, it means inflation. I think that some degree of inflation, the creation of new credits, will be necessary. Therefore, I regret that the Chancellor of the Exchequer did not take the opportunity of this Budget to recast our whole system of direct taxation and rebuild it.
There is in to-day's "Times" a letter from Sir Reginald Rowe, supported by a very strong leading article, recommending a system by which everyone with an income above £150 a year would pay direct taxation deducted at source. It is suggested that there should be a rising scale starting at 1s. in the £ and working upward. It would be essential to combine such a scheme with a thoroughly adequate scheme of family allowances. Sir Reginald Rowe, I think rather optimistically, estimates that his proposals might bring in as much as £1,000,000,000. I do not think it would bring in as much as that, but it would bring in many hundreds of millions and it would be better than trying to patch up and build on to our present system. If we go on doing that, the present system may collapse under the strain. I beg my right hon. Friend to consider doing something on the lines which I have indicated in his next Budget. Unless we do something on those lines to raise a greater amount by taxation, I am convinced that under the stern and increasing pressure of the economic situation, more and more voices will be raised to demand, either a severe general rationing to include everybody or else some form of capital levy.
Already in the Debates of the past two days those pleas have been put forward. The hon. Member for Leigh (Mr. Tinker) advocated treating the inhabitants of this country as if they were the citizens of a beleaguered city, and treating them all alike. I wonder whether the hon. Member realised the full implications of that suggestion. It would have certain advantages. It would do away with the almost intolerable anomaly which exists to-day that a married man in the Army draws, at most, with stoppages and so forth, 7s. a week, while his brother of about the same age and possibly unmarried, may be working in a factory and drawing £8 or £10 a week.

Mr. Ellis Smith: Or he may be a stockbroker.

Mr. Loftus: He may be a stockbroker but that is the kind of situation which is causing complaint to-day and I warn the Committee that we shall have to deal with it sooner or later, in some fashion or another. But to return to the proposal of the hon. Member for Leigh, I suggest that

the implications of it are very serious. If the State commandeered, for the duration of the war, the income of everybody obviously the State must also for the time being meet everybody's liabilities. It fills me with horror to think of the swarm of new officials which would have to be created. Heaven knows we have enough officials in the country now. Think too of the deluge of paper, of new forms of all kinds, that would descend upon the country, detracting from our war effort. Our old friend the capital levy has also reared its head in these Debates. I think the point made in regard to the capital levy was adequately met by the hon. Member for East Birkenhead (Mr. White). He pointed out that the form of capital levy suggested by the Opposition would mean handing over to the Chancellor of the Exchequer a lot of assets, which he simply could not realise in cash, and it is cash that my right hon. Friend wants.
Any form of capital levy must, in its nature, be inflationary, but I realise that there may be different forms of capital levy and if in the future we are ever to consider such a scheme—a scheme to which I object and which I consider to be inflationary and bad—let us consider the least harmful type of capital levy. Therefore, I venture to put forward certain proposals which were made to me by a former Conservative colleague of mine in this House, not that I entirely approve of them, but as indicating the least evil form of capital levy that I can conceive.

4.10 p.m.

Whereupon The GENTLEMAN USHER OF THE BLACK ROD being come with a Message, The CHAIRMAN left the Chair.

Mr. SPEAKER resumed the Chair.

Orders of the Day — ROYAL ASSENT.

Message to attend the Lords Commissioners.

The House went; and, having returned—

Mr. SPEAKER reported the Royal Assent to:

1. Merchant Shipping (Salvage) Act, 1940.
2. Unemployment Insurance Act, 1940.
3. Newcastle-upon-Tyne and Gates-head Gas Act, 1940.
4. Mid-Wessex Water Act, 1940.

Orders of the Day — WAYS AND MEANS.

Again considered in Committee.

Question again proposed,
That the law relating to the National Defence Contribution be amended (as respects all accounting periods beginning on or after the first day of April, nineteen hundred and thirty-nine, and so much of any accounting period beginning before that date as falls on or after that date) so as to disallow deductions in certain cases in respect of interest, annuities and annual payments, and in respect of payments under certain contracts or arrangements relating to indemnification in respect of war damage.

4.22 p.m.

Mr. Loftus: I was describing, without commending, certain proposals for the least harmful kind of capital levy put before me by a former colleague in this House who is no longer a Member. His idea was that there might be a compulsory loan bearing interest at a nominal rate—say, half of 1 per cent., or 1 per cent.—and that every individual with assets above a minimum, say, of £500—or whatever the minimum might be—should always hold a certain percentage of his assets—we will assume 5 per cent.—in this compulsory Government loan with a nominal rate of interest. The mechanism which he proposed was as follows. In the annual Income Tax return there, would be one or more extra pages added in which the individual would make a return of his total assets and their value. I admit there would be a difficulty in valuation. Stocks and shares could easily be valued on current quotations. Land, houses, factories, and so on, would be more difficulty, but there might be a rough and steady method of using assessments as a basis for valuation. Each year the individual would have to show among those assets the particular percentages—say, 5 per cent.—of the compulsory Government loan. This loan would be issued at par by the Bank of England, it would not be dealt with on the Stock Exchange, and it would be redeemed at par by the Bank of England and could be used for the payment of Death Duties. If an individual's assets fell heavily in a year, the Bank would be under the obligation to redeem at par by paying out in cash the proportion of the compulsory loan that had to be cancelled.
The effect over a long period of years would be this. National wealth increases, and therefore, there would be over a

period a continuous issue of this nominal loan, and the issue would raise money that could be used to decrease taxation which is so heavy to-day that it is checking enterprise, which we want to encourage. It may be replied that in times of slump the Bank of England would be cancelling so much of this returned stock that there would be inflation; but in times of slump and falling prices this increase in the money paid by the Bank in cancellation would be a useful corrective of the slump. It would be a valuable thing. There is one safeguard that would have to be made. A great deal of the capital required would have to he borrowed, and those who borrowed for this purpose only would have to be assured of a very cheap rate of interest—possibly 2 per cent. or 1 per cent. above the Bank rate—by direct Government intervention. I have not time to set out the details of the proposals, but that is the general idea.
If there is a danger of inflation, if we have to expand credit, do let us face the fact. Let us not indulge in wishful phrases, such as, "We will never have inflation," unless we mean to take the sternest measures to prevent it. We have had enough wishful thinking in military matters during the last 10 months. Let us not indulge in wishful thinking in economic matters, or it may lead us to disaster. Let us organise and plan any necessary and moderate inflation in such a manner as to do the State the least possible harm and leave the least possible burden for the future. I have pointed out before in the House what I want now briefly to repeat. I ask the Chancellor of the Exchequer to study that remarkable article which appeared in the "Economist" last November under the heading "The Technique of Inflation." Whatever we do, we must not follow the same technique as in the last war—the creation of credit by the banks, the lending of those credits to customers, the customers buying War Bonds and depositing those War Bonds as a basis for loans for more War Bonds. This had a kind of snowball effect and left a vast burden of debt to the nation. The "Economist," which is a most orthodox paper, suggested that a new technique was necessary by which the Government should borrow any inflationary money, any credit created for the purpose, direct from the joint stock banks, paying a


charge to cover their overhead costs, book-keeping, etc. The charge mentioned by the "Economist" was one half of 1 per cent. I commend that article not only to the Chancellor, but to all hon. Members who are interested.
I turn now to another subject, and that is the mechanism of the creation and cancellation of money and of credit, which is vital in considering a Budget of any kind, but particularly necessary in considering the present grave financial difficulties. My hon. Friend the Member for Kidderminister (Sir J. Wardlaw-Milne) said on Tuesday last that the whole of our system of raising money will have to be looked into with fresh eyes after, or even during, the war. I profoundly agree with him, but he may not agree with the application which I would give to his text. Let me first say this. I have the highest admiration for the management of our joint stock banks. I admire the great ability and the high integrity with which they are conducted and which make our banking system the envy of the world. I have always deprecated foolish attacks on the banks, and anything I say is not in criticism of the management of the banks, but of the system; for I have never concealed my opinion that the system whereby most of our money—and three-quarters of our money is cheque money—is created by companies and not by the State is a wrong system, and that it is responsible for many evils. I am convinced that under our privately controlled issue of money, money that is burdened with interest from the moment of its creation, we shall never be able in peace time to develop fully our agriculture and industry, and we shall be able to do so in war time only at the cost of piling up vast burdens of debt. I will go further. I will say that under this system you will of necessity always be hampered and hindered and delayed, as we have been during recent years in dealing with the great problems of unemployment, Colonial development and rearmament. I do not believe that the delays in our rearming were due to optimism or the short-sightedness of our politicians, or even so much to the desire of the Treasury to preserve our rate of foreign exchange, but that they were inherent in this present financial system.
Now that we have reached this breakdown of the old financial system, I urge the Chancellor to do what ought to have been done long ago, and that is, that the Crown should resume the essential right of every State—the right given away by William III in return for the Throne—to control the issue and cancellation of every kind of money. I do this in order to help my right hon. Friend. By this means, if and when inflation becomes necessary—and controlled inflation may be desirable at times, and it would certainly have been desirable in 1932 and 1933 at a time of falling prices—the State itself could issue debt-free money and credits under due safeguards, perhaps redeeming, when desirable, by an annual instalment, and thereby getting rid of the burden of interest which raises so much the rents of our municipal houses. I hold that if the Crown resumed this ancient right, the functions of our great joint stock banks would remain, under the same ownership and the same management, just as necessary, just as honourable, and just as profitable, as they are to-day.
I know that many will say that these words are merely the mutterings of a currency crank, and that I shall be accused of being a green shirt and a follower of Major Douglas. I never have been, although I have admired greatly his diagnosis, without agreeing with the remedies he proposes. My reply is that I have learned these ideas as a result of taking the advice of Lord Baldwin, who told us to study the work of Benjamin Disraeli. I followed his advice, and I now quote the words which he used. Disraeli wrote that King William III
introduced into England the system of Dutch finance. The principle of that system was to mortgage industry to protect property. This system has made debt a National habit. It has made credit the ruling power, not the exceptional auxiliary of all transactions.
Disraeli described the results of this system in typical Disraelian florid rhetoric:
A mortgaged aristocracy, a gambling foreign commerce, a home trade founded on a morbid competition and a degraded people.
It might be objected that Disraeli wrote these words before he had the experience of office, and before he shouldered the heavy burden of being Chancellor of the Exchequer. I will quote, in reply, the words of one who was Chancellor of


the Exchequer more times than any other man in our history, Mr. Gladstone. He said:
From the time I took office as Chancellor I began to learn that the State held, in the face of the Bank and City, an essentially false position as to finance. The Government itself was not to be a power in matters of finance, but was to leave the money power supreme and unquestioned.
These are voices from the long distant past, but I would call in the voice of one of the greatest of living Liberals, Senor Madariaga, who at one time was President of the League of Nations. He said:
These great financial institutions have attained two aims—they have all but evicted the State from its position as the only dispenser of money: they have all but evicted the industrialist from his position as manager and controller of industry. The absorption of all powers by the dispensers of credit is one of the most fantastic phenonima of modern life.
But that is a voice from the Left, and it may not be acceptable to Right Wing opinion. May I then quote from the recent writings of Pope Pious XI, who, in an Encyclical, said:
It is patent that in our days not wealth alone is accumulated, but immense power and despotic domination are concentrated in the hands of a few, who, for the most part are not the owners, but only the trustees and directors of invested funds, which they administer at their own good pleasure. This domination is most powerfully exercised by those who, because they hold and control money, also govern credit and determine its allotment, for that reason supplying the life blood to the entire economic body and grasping in their hands, as it were, the very soul of production, so that no one can breathe against their will.
I do appeal to the Chancellor of the Exchequer to consider now, in this hour of grave peril, the resumption by the Crown of its ancient right to control the issue and cancellation of all kinds of purchasing power. I invite him to read the remarkable leading article which appeared in the "Times" last Thursday: It states:
Much harm can be done to our cause, both in Europe and overseas, by the insinuation that we stand for the old order. This charge should be emphatically and authoritatively refuted.
The Chancellor of the Exchequer can refute this charge both in Budget speeches and Budget practice.
Finally, I make this appeal, not only to my right hon. Friend the Chancellor of the Exchequer, but to every Member of this Committee and every Member of

this House. There are multitudes, in this country and throughout the world, of men and women who realised before this war that the whole modern system of finance was breaking down; that it had failed to solve in any country the unemployment problem, that it had destroyed vast stores of food desired by the people, and that the system stood condemned. But they regarded with horror the alternatives offered to them by the disciples of either Karl Marx or Adolf Hitler—the degradation of man to the level of the hive or herd, the revival of slavery of mind and body, destructive to the soul of man. They look for and believe in a better order, and many of them look to this country for a lead. I believe that these multitudes have their own vague ideal of what the future should be. They desire a varied society of free men, where the productive resources are used to the utmost, and where consumption keeps pace with productive power. They desire individual liberty to be maintained, and they desire every encouragement of legitimate private enterprise. They also wish freedom of choice in the market and that international trade should no longer be a savage struggle to obtain favourable balances, but rather an equal exchange of goods to the mutual advantage of all nations. These people look to Britain now to give a lead, and I pray God that they do not look in vain.

4.42 p.m.

Sir George Broadbridge: In common with other hon. Members, I can say that the City of London will approve the Chancellor of the Exchequer's proposals and will give every support to them. This war must be paid for, and paid for quickly, and one is not surprised that the Chancellor of the Exchequer, in his opening statement, emphasised several times that what he wanted was cash. It is to the City of London that the Government always turn in respect of national borrowing, whether it be Treasury Bills, Savings Certificates, Defence Bonds, various War Loans or, only recently, bank deposits. In fact, it would not be incorrect to say that the City of London is the barometer of the reception of all national projects. And so it can be said that, however unpleasant this burden of taxation may be or however great the sacrifice to be borne, both the State and the country will


shoulder them and give every support they can to the Government.
Having said that, I desire now to make a few brief comments, the first of which is in the nature of a question. In the proposals tax is to be deducted from the wages of the workers at some given time, and the employers are to hand over that deducted cash to the Revenue. What I wish to know is—and this has been put to me in my constituency—what is to happen if between the deduction of that money and its handing over the employing firm becomes insolvent or is dishonest? Will there be any liability resting upon the employés who have already had the cash deducted from them?
With the various impositions, both direct and indirect, I am sure the question will soon arise, if it has not already arisen, whether the larger taxpayer is not already, in a minus position. Surely there must be a limit to a taxpayer's resources, even allowing for his patriotism and his self-sacrifice. There are numberless people who rely for their existence on dividends and interest—I refer in particular to old people, spinsters or invalids. To-day, their incomes have become almost negligible. The hon. Member for Leigh (Mr. Tinker) made a remark yesterday about the rich being soaked. I do not think it would be incorrect to say that the rich have already been drowned in taxation. A person with an income of £150,000 pays no less a sum than £130,000 to the Government. Suppose that £150,000 was split up into 15 sums of £10,000 or 20 sums of £7,500 or 30 sums of £5,000, the Government would be tremendous losers in taxation because the basic standard of taxation would be very different. After all, therefore, the large income earner is a real asset to the Government.
The City, which is the counting house of this country and the Empire, is always affected, as it is being affected now, by the condition of trade as well as by taxation. I am told in my constituency, and I have had hundreds of letters and interviews to this effect, that Government controls have played havoc with businesses; in fact, large numbers of businesses have already ceased to function. If every few months we are to have supplementary Budgets, each adding to the burdens of taxation, what is to

be the eventual outcome? In addition to the national taxation there are the local rates, and these are increasing owing largely to the expenditure on A.R.P. and to the profligate expenditure in peace-time of local authorities. To take the place of people taxed out of the Chancellor can only look to those whom I prefer to call emergency taxpayers, that is, excess profits taxpayers and the workers who are now earning on munitions anything from £5 to £20 a week. [An HON. MEMBER: "Where are they?"] I can give heaps of names. In this respect may I call attention to the disparity between the pay of soldiers and the pay of munition workers? We must not overlook the fact that in the Government controls the great combines are undoubtedly scoring heavily and putting out of business the comparatively small traders. Only the other day we saw announced that a large combine had shown an increased profit over the previous year of no less a sum than £2,250,000.
I was disappointed that the Chancellor left petrol alone in making his proposals. I know of many cases where legitimate traders have been unable to obtain sufficient petrol for carrying on their businesses, and yet, when one travels about towns and the country districts, one observes the colossal amount of joyriding that still goes on. I was also disappointed that the Chancellor considered it necessary to interfere with the Entertainments Duty, because it is easy to observe that places of entertainment to-day are largely patronised by officers and men home on leave. I should have thought a much more easily collected source of revenue would have been an increase in the cost of wireless licences. There are 10,000,000 to 12,000,000 licence holders and the money is easily collected because the Post Office are the issuers. I can only imagine that this proposal is deferred until we have the pleasure of listening to another supplementary Budget. Some of my constituents have suggested that cycles should be taxed. I do not agree, because cycles, especially in the urban and rural districts, are largely used by the workers for going to and from their businesses.
With regard to the Purchase Tax, criticism has reached me from my constituency, and as late as to-day a large manufacturer told me that the total stock


in the hands of retail traders is many times larger than that in the hands of the wholesalers, and that this tax should have started at the retail and not at the wholesale end. With regard to books and all the fuss that has been made about the suggested tax, I can see nothing to which to take exception. Generally speaking, reading is a hobby. Most of the business in books, in any event, is done with libraries. Apart from books and reading, I have a hobby, which is either golf or tennis. Every time I play I have to pay a substantial sum for the pleasure of doing it. If I have to pay for my hobby, surely book readers can pay something for theirs. The only thing we have to do at the present time is to concentrate on winning the war. However unpleasant taxes may be—and they are never pleasant—we have to shoulder them, and we can only hope that we shall not have to see many more burdens placed upon us. Whatever they are, however, I am confident that we shall all do our best to shoulder them, and we wish the Government every success in bringing the war to a successful conclusion.

4.52 p.m.

Mr. Barnes: I desire to take the opportunity of the discussion on the Budget Resolutions to re-state some of the objections to the Purchase Tax which I raised when the proposal was introduced. Before passing to my criticism may I put a point to the Financial Secretary? The Chancellor announced an interesting innovation in the collection of Income Tax when he proposed that the system adopted in the Civil Service and other large institutions would be extended to general industry. In its application to salaried officials one does not see any particular difficulty, while the advantages to the individual are very apparent. One can, however, appreciate the administrative difficulties in regard to both the Inland Revenue and employers in dealing with the large volume of wages of labour which fluctuate from week to week. It is desirable, if it is the intention of the Treasury to make this practice universal, that they should give some idea of the machinery of collection. There are, too, a large number of persons who do not draw their weekly wages from one employer but are often employed by more than one concern. It would be for

the convenience of industry generally if the Treasury indicated their intention with regard to the machinery of collection as quickly as possible, and also whether it is their intention to operate the scheme within the present Income Tax collection year.
While welcoming the concessions which the Chancellor has made in the Purchase Tax, I see no reason to modify my objection to the tax as a whole. My most forcible objection is to the schedule of goods that will be subjected to the 12 per cent. It is significant that in the two Budgets which the Committee has had to consider in the past three months the Purchase Tax is the only proposal that has met with widespread criticism. Before the Second Reading of the proposed Bill could come before the House the Chancellor saw the necessity of recasting his proposals. The concession to cut out children's clothing, boots and shoes is a valuable one, and the principle of differentiating the tax so as to levy the higher duty on the more expensive and luxury articles is also very good in intention. While I oppose the form of taxation involved, I should like to make it plain that I do not minimise the importance of these concessions. My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), although he gave general support for the proposal, indicated that in the Committee stage he might have to press for further concessions.
I am definitely apposed to the inclusion of all those goods which will be scheduled for tax at 12 per cent. I venture to express the opinion that when the schedule of goods subject to the 12 per cent. is submitted in the Bill, many Members who are now inclined to support the proposal may be compelled to alter their view, because it will become apparent that many of the goods will be in the same category as children's clothes and boots. Under the Prices of Goods Act the Board of Trade have scheduled a list of goods of which they have controlled the prices, holding that those goods represent necessaries of life and that it is undesirable in the public interest that prices should rise. All goods in that list will come within the range of the Purchase Tax. Therefore, we have the position that the Board of Trade have listed a range of goods of


which they desire to control the prices, whilst the Treasury, for taxation purposes, subject them to a tax which will steeply advance their prices. I hope we may induce a more generous frame of mind on the part of the Treasury and exclude the goods covered by the Prices of Goods Act from the operations of the Purchase Tax.
By his new taxation the Chancellor is hoping to raise £239,000,000, and £110,000,000 of that is to come from this Purchase Tax, a form of indirect taxation. When we add the sum of £13,000,000 from beer, £9,000,000 from tobacco and £4,000,000 from the Entertainments Duty, we find that £136,000,000 out of the £239,000,000 is to come from indirect taxation. I must enter a very strong protest against this enormous increase in indirect taxation. In his Budget speech the Chancellor mentioned that there are 300,000 retailers who do not bother to keep ordinary business accounts. That indicates how very large is the volume of trade conducted by rough-and-ready methods, and if that happens in the case of hundreds of thousands of small shopkeepers, it must be so also in the case of the large body of persons, hardly to be described as regular traders, who are in the habit of making up goods and selling them direct to their customers. How does the Treasury propose to see that an equitable basis of competition is maintained in the case of the wide range of clothing and other goods which will be subject to the Purchase Tax when there is such a large area of individual trading going on in this way? In recent years there has been a large development of direct trading between factory producers and institutions, clubs, local authorities and various organisations in regard to uniforms and things of that description. Are we right in assuming that although these transactions do not go through the ordinary channels of trading, that is from the factory to the wholesaler and from the wholesaler to the retailer, they will not be exempt from the Purchase Tax? I should like the Financial Secretary to tell us how it is intended to deal with such variations in trading.
It is proposed to impose the Purchase Tax upon wholesale values, but I think it is obvious that it is the retailer who

will have to provide the capital to enable the Treasury to get its money. As far as I can see, it will mean that there must be an addition of one-sixth to the capital which will be required by retailers who are handling the goods, and that will have to be found by retailers at a time when the bulk of their trade is regulated by the Government through various controls and their margins are very strictly limited. The advantage to the Treasury of this method of collecting the tax is obvious, but it seems rather unfair that the Treasury, to suit its own convenience, should apply the tax at the wholesale stage and that the retailer should be left to carry the burden of the extra capital outlay.
As to the reactions of the tax, let me take one aspect of life it the moment to provide an illustration. Let us visualise the position of many households who are involved in the problems of evacuation, the households in reception areas which are receiving evacuees and the households in the areas which are sending their children away. Many receptionist homes have had to purchase additional furniture, bedding, etc., in order to provide accommodation for evacuees. In the case of working-class families particularly, when the children are sent away from home the mother makes an exceptional sacrifice in order to provide them with the necessary clothing. The exemption of children's clothing from the Purchase Tax relieves the problem so far as they are concerned, but we have now got to the stage when evacuation is not confined to children, because elderly people and others are going. If we take into account the whole of the restricted area round our coasts, there are tens of thousands of families who are being compelled to evacuate, and the problem provided by the additional purchases which have to be made is a very material one. In the average working-class home there is no surplus equipment to meet circumstances of that kind.
We have to observe, also, that a number of relatively poor working-class homes have been destroyed by aerial bombardment. There is no provision for immediate compensation for the destruction of the family furniture. They may get some compensation after the war, but nothing is certain. A certain amount of the furniture will have to be replaced and the Committee ought to pause before imposing heavy additional to taxation on a vast


range of goods which people will have to buy to replace those destroyed by bombing.
A wider aspect of the problem of increasing prices is connected with Treasury expenditure. To-day the Government are the largest buyers of goods, are responsible for more wage packets than any section of industry, and if we adopt a policy of steeping-up by taxation the prices of a vast range of goods such as go into the homes of the average wage-earner we shall get into a vicious circle of increasing wages to meet increasing prices, and the country will gain nothing from the imposition of the 12 per cent. tax on this class of goods. A further practical point is that the goods which it is proposed to tax are not foodstuffs or goods which are turned over rapidly from week to week and therefore do not call for an outlay of capital over a long period, with the accompanying interest charges. Many of the goods which will be subjected to the tax are of a class which are likely to remain on the shelves of wholesalers and retailers for months, in some cases. A good proportion of them are seasonal goods. In those circumstances the Treasury and the Board of Trade will surely have to recognise that legitimate interest-charges must pass into the price of those goods as well as the 12 per cent. tax addition. It is no use our running away with the idea that the consumer will pay only the bare 12 per cent. extra. Further, in the case of many lines of goods there is no guarantee of sale. If the retailer has missed his market, or if fashions change or the taste of the community varies, the retailer cannot always realise the price he has paid for the goods. He has to cut prices to get rid of the goods, and realise whatever he can for them. There is no guarantee that he will be able to sell them at a price which will recoup him for the tax he has had to pay upon them.
I should like to conclude by dealing with a still wider aspect of this tax in relation to the Government as a whole. The Chancellor's speech and the discussion upon it have indicated the concern both of the Treasury and Members of this Committee at the problem we are now facing in regard to taxation—the amount we can raise from taxes, the capacity of the community to invest in loans, and the gap there is likely to be between the revenue from taxation and

the money from loans and Government expenditure. So arises the problem of the Government and of this Committee, as to whether we can avoid inflation.
Without pretending at all to understand the economics of, say, William the Conqueror, or to know the value of the City of London to the community, I submit that the way in which we handle prices at this stage will have a very important bearing upon the forces which go to start a process of inflation. The House of Commons was very aware at the commencement of the war of the existence of this problem. I recollect the early statements which were made from the Treasury Bench and the support received from all quarters of the House for the proposal that, during this war, we should pursue a very determined policy of keeping prices down, and thus prevent the process of prices chasing wages and wages chasing prices. After examination of the position in recent months, I feel that the Government are losing grip on that policy. In the first few months of the war it was followed fairly successfully, but Members will see, if they glance at the position in recent months, a tendency to lose grip of that situation.
We adopted three methods of trying to maintain prices on a more or less stable level. First was the immediate and general control of commodities that were imported and likely to be influenced by overseas circumstances. Then the Treasury followed a policy of subsidising many commodities which affected the cost-of-living index, like wheat for the purpose of keeping the loaf steady, the subsidy to milk and bacon and so on. We followed on with the Prices of Goods Act, which sought to keep control over the general run of merchandise prices. In recent weeks we have observed that the Ministry of Agriculture have advanced farm prices by, roughly, 20 per cent. All the examinations that I have had taken out have convinced me that that advance of 20 per cent. is beyond what is necessary to give 48s. a week wage to agricultural workers and to meet the increased costs of production.
There is every indication that there was no proper measure when these prices were fixed. The Treasury, departing from its policy of subsidy, is, in the case of milk at any rate, passing on the cost to the consumer. Now, in the Purchase Tax, a


vast range of other goods is being brought into the area of taxation, and the prices of those goods will be steeply advanced. These goods have already increased considerably above food prices. The Committee ought to take into consideration the fact that these matters are linked together. We are hesitating whether the problem of the gap will eventually land us into inflation, but if the Committee deliberately start a policy of taxation and of advancement of produce prices beyond what is actually necessary for purchasing power, we may introduce a policy of inflation.
When we survey the circumstances of the policy of this country in recent years, it appears that we ought to have learnt the bitter lesson of the consequences of indecision in foreign affairs and in regard to a proper defence policy. I suggest that we shall confront the same position if we go on, month after month, in the field of finance, refusing to face the broad position that is imposed upon us by the fact that the Government, in the circumstances of war, and in the very nature of the existence of the Armed Forces and the Civil Defence Forces, involving the cost of munitions production, equipment, and the provision of food, are bound to be brought down to a very hard but simple problem. We shall not solve that problem and narrow the gap by adopting a policy of trying to get money by easy methods. Indirect taxation is an easy method of taxation. I am not speaking now from a narrow, partisan point of view. I am definitely opposed in principle to indirect taxation but, in its wider aspect and in relation to the problem that overrides every other consideration at the present moment, the House of Commons is, in my view, following the wrong policy to deal with our major difficulty. If we seize at this moment the opportunity to raise indirect taxation over a vast area, that will be the one thing that will take prices out of our control.
I am not arguing for soaking the rich or the question of how much the poor should pay. I say that we are faced with a very definite and simple problem of finance and economics. There is so much money in the community. It comes into the possession of each one of us in the form of income, either as wages or salary or n the disbursement of some pension,

allowance or benefit from the State. It would be far better for the Chancellor of the Exchequer, this Committee and the country, if they faced the problem that we shall require so much money from taxation and so much from investments. Over and above that, the consumption of the community must come down to whatever is left over. As far as I can see, that is a sounder principle than social credit, manipulation of the banks and things of that description. That is the hard fact of goods and consumption. My view is, therefore, that the Committee should give attention to raising whatever money is necessary direct from the incomes of the individuals. When that sum is determined direct taxation should be imposed to meet the sum required. Then, whatever we may have over, we must adjust our standard of living to meet the expenditure we have incurred.

Sir Patrick Harmon: On a point of Order. Would it be possible, Sir Dennis, to suggest to hon. Members that speeches might be limited in length? They have been very long this afternoon, and many hon. Members wish to speak.

The Chairman: The hon. Member has made the suggestion, but he knows that I have no power to limit the length of speeches by hon. Members.

5.24 p.m.

Mr. Clement Davies: So far as in me lies I will do my best to accede to the hon. Member's suggestion. This is the third of what I may call the Statements that have been issued since the war began. No one can pretend that we have had three Budgets, in the sense that we understood Budgets before the war, when the effort was always made to link up the amount that we should raise by taxation with the amount that was required for expenditure. All that we have been able to have is the estimated expenditure required from time to time and the proposals for the taxation which can be levied, and which, of course, could not possibly meet that expenditure. It is rather interesting that in this Debate, and in the one that took place three months ago, there has been no criticism of the burden of the taxation. Everybody has said: "This is all right. The taxation has to be met." The only criticism, and a very mild one, has been


in regard to the incidence of a particular tax and not to the form of it. The criticism has, in the main, been the other way. If it is necessary, the country and this House are prepared to support fresh and bigger burdens.
In spite of all that, it is clear that a new issue has to be faced and that is what I propose to do in this Committee this afternoon. In a speech which he made from this Box, in reply to the Budget proposals made by Sir John Simon, as he then was, the Lord Privy Seal very truly began by saying that, since the war, the whole economy of the country had changed. That is the issue that one has to face. We can approach that issue in the orthodox way, that is, by the financial method. That is the one that we should rightly follow in times of peace, when you can link up the amount of your expenditure with the amount of your taxation. There is another plan, and that is the one that we have to face now; it is the economic plan. It is that which has been followed by the Chancellor of the Exchequer and by his immediate predecessor. The basis of it is that you tax to the extent that the national income in the hands of individuals will be reduced to the amount which will buy the available services and commodities at existing prices. The national income is increasing day by day; on the other hand, the consumable goods and services for the public, apart from those required for the war effort, are decreasing day by day. The result is that there is an enormous gap which, left alone, makes inflation inevitable. [An HON. MEMBER: "Why?"] For the reason that there is the immutable law of supply and demand. The demand for the services and commodities is increasing as the national income is increasing, while the supply of the commodities is going down. That gap, as pointed out by the Chancellor of the Exchequer himself, amounts to-day to something between £2,000,000,000 and £2,300,000,000
It is rather difficult to get at the truth. I do not know whether the Financial Secretary to the Treasury can help us by giving a little further information about the total figure of £3,467,000 000 that was mentioned by the Chancellor. To my mind—I may be wrong about this—there are items in it which are really

not expenditure out of income, but are really of a capital nature. For example, items expended on the building of more factories and upon goods purchased for the community, such as wheat, vegetable oils, and so on, which are again resold. We seem to inflate the figure by putting in the actual sums which have been so paid on the one side and on the other side the revenue which has been so gained. The right thing to do is to put in the actual profit or loss, or the subsidy. The subsidy would be legitimate, because that is a burden which has to be met.
Assuming that that is there—this is a pure guess on my part—the amount which is included in that would amount to something like £500,000,000. Taking my gap as £2,300,000,000, there is still, nevertheless, a gap of £1,800,000,000. How is that to be faced? I am sorry to disagree with my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), but I find myself in agreement rather with the hon. Member for Wrexham (Mr. Richards) in saying that I cannot see that more can be saved under the present circumstances than £1,000,000,000. He said that much more might be saved, but I do not suppose that in his explanation it would go much beyond £1,000,000,000. If I am right, then there is a gap of £800,000,000. How is that to be obtained? It cannot be obtained out of savings. The orthodox way would be, of course, by taxation, but taxes so as to get another £800,000,000, which is equal to the total amount which has been obtained, and necessarily obtained, before the war began, is not only impossible but dangerous. It would be dangerous because of the tremendous upheaval that such taxation would cause. Moreover, I do not suppose that it would really help with the war effort. On the other hand, it might be destructive of the war effort and would not necessarily contribute towards national savings.
There is that deficit of £800,000,000 at the present moment. Of course, it can be obtained by inflation. Inflation is nature's remedy—it is like a scar covering a wound—but to allow inflation to go round gallivanting at this time in order to bridge that gap would not only be a foolish thing, but an extremely dangerous thing to do. Everybody agrees that it is foolish—

Sir P. Hannon: Would the hon. and learned Gentleman forgive me? Does he suggest that the Chancellor indicated any development involving inflation?

Mr. Davies: I am sorry if I did not make myself clear. I said that everybody said so, and I included the Chancellor of the Exchequer. He made a point of it. I said that there is one method, namely, by inflation, which is nature's remedy. Nature's remedy, however, is not one which should be followed at the present moment, and I think the Chancellor of the Exchequer would agree with me. These are no more than a few bricks when we want a whole wall in order to fill up that gap—

Sir P. Hannon: Would the hon. and learned Gentleman allow me to urge him to try and fill up this gap?

Mr. Davies: An appeal was made to me that I should be as short as I possibly could. I cannot possibly be short if I am interrupted, although I feel flattered that when I am interrupted the question always comes from the hon. Gentleman. The solution cannot be found in the financial sphere. It must be found in the economic sphere, and therefore it must come from the control of production. In the Budget which was introduced by Sir John Simon three months ago, the income that he was getting from taxation was £1,234,000,000, which left a deficit of £2,200,000,000. Of that deficit the Chancellor of the Exchequer by his increased taxation between now and the end of the financial year can get only £126,000,000. He very rightly says that the chances are that that deficit will go on increasing. What I should like to point out is that it must increase because of the urgent requirement for making up the deficiencies of the past years, the extra requirements which will have to be met because of the extra German effort that is bound to come from the occupation of France, and the extra effort which will have to be made to build up the striking force when we take the offensive. If the expenditure increases, the deficit under present methods will increase as well, and we can meet that expenditure only by the full mobilisation of all available producing sources and by our capital reserves without exception. We demand for that purpose that all labour and capital equipment of stocks and material not required

for the maintenance of the standard of life necessary for health and morale must be used for defence purposes, and that is the economic plan which I say is the right one to follow and which transcends the financial one.
At the present moment we are not fully mobilised. I do not think that even today we are half mobilised. Moreover, the sacrifices that are being made to-day are not equal. May I mention one or two? Some time ago, in order to encourage exports, the Board of Trade limited the amount of material which could be obtained by factories for producing goods for home consumption. What is the result? I am not criticising the Board of Trade. I am only pointing out the fact. Those factories which are engaged on home consumption are running at half-time or less. Those factories which were fortunate enough to be in a position to engage in export production are working much more fully. Those which are working for the war effort are working fully. I hope they are working 24 hours, but it is not right at this moment that some people should be reduced to part-time or half-time and that others should be engaged to work at full-time. It becomes more obvious, perhaps, if I mention the evacuated areas. There are places which have been evacuated along the coasts. The man who has a shop, a factory or a business in any of those evacuated areas is faced to-day with complete bankruptcy. He has had to leave his stocks, his shop and his goodwill, and yet there are others like ourselves in London in completely different positions. For instance, my life, except for extra taxation and the fact that I am parted from my family, is much the same as it was before. The sacrifices which I am called upon to make are not the same as the sacrifices which the people in the evacuated areas have to make. Our present methods do not put us all on an equal footing, nor do they call for equal sacrifice.

Mr. A. Bevan: If I may, I should like to interrupt the hon. and learned Gentleman. Is it not a fact that if the idle productive capacity of this country is called into use in the war sector, it will result in a demand for more consumption of goods, and as these are deficient inflation will occur in respect of them until they are rationed?

Mr. Davies: The hon. Gentleman is anticipating. That is a matter with which I have to deal. I am now coming to what I suggest should be the plan. The first point is that the production of non-essential goods should be prohibited. By non-essential goods I mean goods which absorb the productive factors useful for war production and coupled with it, of course, goods which although unessential for us, nevertheless can be exported. If these unessentials now produced do not absorb factors useful for war production, they should not be produced, and I hope that I shall get the support of the Senior Member for Oxford University (Mr. A. P. Herbert). For example, entertainments ought not to be subject to taxation. They should be encouraged. The men who are engaged in that trade and who give great pleasure to millions are very few, and to take them away would not increase the war effort. Therefore, instead of taxing those, you should by all means encourage them, so that the morale and the happiness of the people should be continued. That is my first point, the prohibition of non-essential production.
My second point is that the expenditure on essentials must be rationed. Such rationing should be of two kinds; first rationing of foodstuffs and essential specific goods like clothes or boots. It could be done like some of the food is now—rationing by commodity. Other goods which are essential, such as furniture, could be rationed by limiting the amount which individuals should be allowed to buy. For example, at the present moment I am in the position of not requiring more furniture, but it may be that a young couple would require it, and, therefore, there should be a rationing system by which they could acquire those very essential goods. If you cut away the unessential goods and ration the essential goods, there is bound to be a tremendous surplus capacity. That, I suggest, would be an enormous figure. That surplus capacity must be employed by the State in war production, in production for export and in accumulation of stocks. The Board of Trade had something of the kind in mind when they created the Export Council. However, they failed to carry out the plans which they had in mind, although they had been wonderfully successful for this reason, that they only took the negative step. They did not have the machinery for the positive step.

The negative step that they took was that which I mentioned to the Committee earlier, of cutting down the amount of raw materials which would go into the factory to be made for home consumption.
What is the solution for dealing with that on the positive side? The only solution that I suggest is compulsorily to pool each set of industries. That has already been done in one industry, with which, of course, I am very familiar, namely, the margarine industry. Recently the Ministry of Food decided that margarine should be rationed. They decided that the manufacture of goodwill articles, which were worth millions because money had been spent in building up the goodwill of those articles, should cease, and that only two kinds of margarine should be made, a 9d. and a 5d. kind. What did they then say, and what was the plan that was adopted? It was that for this purpose all the factories should be amalgamated into one company, that all the industries should maintain its men, travellers, managers and should be run exactly as before, but should be controlled by not exactly a holding company, but a directing company. They manufacture this and sell it to the Government, and they pool the profits or share the loss. If, perchance, one of those factories is either closed or bombed, the individual owner does not therefore lose everything, and have to wait until a new factory is built. He comes in for his share in the pool. It is a sort of mutual insurance.
That can be easily done with a number of similar industries. You get into much greater difficulties when you come to smaller, varied industries, and still greater difficulties when you come to the retailers. But even that difficulty could be met. Then the retailer on the East Coast to-day would share in the general pool which would be created with the retailers in Birmingham and Coventry, who are probably doing better to-day than ever before, subject to the 100 per cent. Excess Profits Tax. This is a problem that must be faced, and faced very quickly. On the labour side, displaced employés must be paid their standard wage, because they have been displaced through no fault of their own. The wage should be paid during the period of re-training and while they are being reabsorbed into war work. There must be linked with that a generous system of


relief for the employers or a moratorium. Products and prices must be standardised. The fullest use will have to be made of plant, machinery and labour. Such a system will ensure the maximum organisation of the country, and the maximum production, and will prevent the danger of vested interests militating against the effective prosecution of the war. The State will rationalise production.
If such a system is followed—and it is quite different from the pre-war system—wherein, then, lies the importance of the financial policy? It becomes of very little importance. Non-essentials being prohibited, expenditure on essentials being rationed, and, therefore, curtailed, sufficient savings will be inevitable, and they will fall into the banks or the savings banks, and will be available for the Chancellor of the Exchequer. There will come his "complete saving of national income, over and above what is required for maintaining the standard of life." The Government already possess, under the Act which we passed in May, all the powers needed for such a programme. All I am asking is that they should use them, and use them quickly. I am not alone in my appeal to the Government. There is a very remarkable leading article in the "Times" to-day, calling attention to this very thing. It is headed "Shirking the Issue," and it says:
The more closely the Budget statement is examined the plainer it becomes that any serious attempt to grapple with the financial difficulties of the war has been postponed for the second time.
It winds up by saying this:
It is high time to make an end of interim Budgets with all their consequent unrest and uncertainty.
I agree. I remember that, in reply to Sir John Simon on the last Budget, I ventured on two prophecies. The first was that another Budget would be introduced within six months. That has proved correct. The second was that it would be introduced by a Chancellor other than himself, and that has proved correct. The article continues:
They are the outcome of a timidity which is afraid to trust the capacity of the nation for self-sacrifice. It is wholly misplaced timidity; for the nation, while impatient of waste, is ready to respond to bold and imaginative leadership in finance as in every other field of the war.

I endorse those words, and I hope that the time is rapidly coming when that great issue will be faced.

5.51 p.m.

Mr. A. P. Herbert: I hope that a simple seaman will be excused if I do not follow my hon. and learned Friend into the deep waters that he has navigated so confidently and well. I hope the Committee will not be surprised or shocked if I say a few words on the subject of the Purchase Tax on books. I approach the subject with some sense of delicacy, as one who was, at least, a professional author, but I approach it with a good conscience, because since the war began I have not been able to write books, and as long as His Majesty requires my services elsewhere it is not likely that I shall be able to write one. Also, as a representative of that great centre of light and learning, Oxford University, I feel that I may say something on this matter.
I hope that the relations of Oxford and the City of London will always continue to be friendly, but when I hear the representative of the City of London referring to a tax on books, the "machine-tools of education," as someone has said, of the great craft of literature, the great profession of learning, as a tax upon a mere "hobby," to be compared with golf, then that is a mind with which I can make no contact, and I do not propose to try. I address myself, with much more confidence, to the Chancellor of the Exchequer. Great qualities, such as geniality and tact, have carried the right hon. Gentleman from one office to another, with the good will of all and the hopes of many, as you may see some cheery reveller staggering from "pub" to "pub," emerging from each with such a radiant smile that no one has the heart to stop his passage to the next. But, in this affair, without intention, I am sure, he has added insult to injury.
After receiving a deputation of the highest authority, led by the Archbishop of Canterbury and including men of the greatest light and learning, he dismissed the whole thing as if it were merely a question of "the publishing trade" having to suffer the same as other trades. There is much more in it than that. Let me give an example. Twelve months ago I was invited by the Ministry, of Information


to address the citizens of Bath at a mass meeting, on the subject of "Our liberties." I gave the delighted citizens of Bath a long and wordy address on that subject, and they went home so well fortified to meet the enemy that the Ministry of Information asked permission to print my address of 6,000 or 7,000 words as a pamphlet. About the same time my own publishers asked whether they could print it in the ordinary way as a book, paying me royalties; but, from patriotic motives, I said, "No, let the Ministry of Information do this, though they will give me a small sum in advance, and no royalty at all." Well, now, here we have the Ministry of Information saying that it is so important that my words should go forth to the people that they ask me to accept an unprofessional and un-generous reward; and here we have the Treasury saying that the consumption of my words must be limited, and they must place a tax upon it. What crazy nonsense is this?
I have been sent a copy of "The Bookseller," on the front page of which is written:
Books are part of the cause for which we fight—Dear Mr. Segrave, I am very glad to know that the list of books to he published here during the summer and autumn is, as usual, going out this year to carry the reminder that freedom to write and read is part of the cause for which the British Empire and Commonwealth fights. …—Duff Cooper.
Which is the right horse here? I am anxious to find out what is in those woolly heads. Does the right hon. Gentleman desire, or does he not desire, in his extraordinary language, to limit the civilian consumption of domestic hollow-ware, brushes, brooms and, as he said finally, with that charming smile, books. Does he really desire to "limit the consumption" of Bibles and Prayer Books? I suppose I cannot get an answer to that? If he does, there is still a niche in that Lobby, and he may go down in history as the first Chancellor of the Exchequer to put a tax on the Word of God.
But I do not believe that that is his intention. I believe, to do him justice, that he will agree that there was never a time when books could do such a service to the community, by inspiration and comfort and the energising of the people, whether it is the lonely soldier in his dugout or the lonely civilian in his dugout or the lonely widow at home. Therefore, it must be that he desires to limit

the purchase and sale of books, of unspecified quality and quantity, but only at home. For not only his predecessor, but he himself, and the Minister of Information are desirous that the export trade should continue; and the export trade is surprisingly large—about half the home trade. Now, may I finally observe, for the hundredth time, that a book is not like a bottle of whisky; nor indeed, is it much like domestic hollow-ware. You might well say, "We shall not sell any whisky in England; we shall keep it all for export and send it to the United States." That, I imagine, could be done effectively; but you cannot do that with books, because the export of books depends on a prosperous home industry. No one would publish a book of mine purely for publication in America. The export trade is a kind of overflow from the main basin. So, if you seriously damage the home trade in books, you may say goodbye to your export trade. But perhaps the Chancellor agrees with the queer observation of my hon. Friend the Member for Aylesbury (Sir S. Reed), who says, "We do not want any more new books and new ideas; let us take down the classics, and be content with the old books, the old ideas." That is what the French generals said. That is what the last Government said.

Sir Stanley Reed: That is what the French generals did not say. If they had taken out the little work, with which they are familiar, called "The Maxims of Napoleon," there would have been no débacle.

Mr. Herbert: But the point is, whether books are modern, or classics or the wretched works of the Senior Burgess of Oxford University, they all have to be bought or sold and pass over the counter. Hon. Members seem to visualise the citizen reaching up and taking down from his shelves the works of Thackeray or Scott. But the soldier in the dugout cannot do that. His books, whatever they are, must be purchased, and the result of this tax will be that he will have fewer books—and fewer good books. My hon. Friend says that the result of the tax will be fewer bad books and more good books. The contrary will be the result. It is the "trashy modern novel," or at least the sensational success, which


carries the losses on the portentous and no doubt more worthy works. One rare and spectacular, and, in my case, unique success can carry the losses on 12 more worthy works, such as "How I Built up the Air Force," by Viscount Woolwich, or a great legal tome like "Caldecote on Co-ordination."
These are facts, and I know what I am talking about. Two book publishers have gone out of business, and one was the publisher of the great and portentous War Memoirs of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). It is a pity that they did not have a few trashy novels to keep them in business. There is the "Life of Marlborough," a magnificent work by a magnificent man, published at 25s. a volume, which will, I suppose, be 28s. a volume now. I should like to see the publisher, who, when this tax is in being, would undertake the publication of a work like that. But I do not wish to exaggerate in a good cause. I am not going to say that all publishers in London will go out of business, though two have gone and there certainly will be more, but there certainly will be fewer books, and fewer good books. I say further, that if but one good book, one good writer, one new thought and one new invention is held back from the public by this tax, it is bad and barbarous and ought to be abolished. I am not thinking so much of pennies as of principles.
I was reminding the right hon. Gentleman just now of a book that I have here, "The History of the Taxes on Knowledge" with which I hope the Treasury officials will try to become acquainted, because they seem to have forgotten, if they ever knew, that it is only 70 or 80 years since the great fight against the taxes on knowledge was fought and won in this House. They were taxes on the free communication of mind, on the movement of thought and on the free expression of opinion. These taxes were finally wiped out between 1850 and 1870, and the principle was then established that we would not put any taxes upon the things of the mind. That principle has stood firmly against every attack since then and has survived two major wars. It has remained for the right hon. Gentleman the Member for West Woolwich (Sir K. Wood) to break it down.
It is a sad and shocking thing that at this time in this titanic conflict, when we are saying, and saying truly, that there are arrayed, on one side, the spirit of force and, on the other, the forces of the Spirit, we should have sunk so low as to be seeking to put a tax upon, and to treat all learning and enlightened literature in the same way as we should treat brooms or something which is kept under the bed. The right hon. Gentleman had a great opportunity. He might have said, "However many Hitlers are at the door, however many dangers and difficulties confront us, we are not so down and out and so poor in resources that for the sake of £500,000—which is my estimate of the yield of this miserable tax—we are going to do this barbarous thing." That appeal I should have addressed with confidence to the right hon. Gentleman's predecessor, because, whatever his detractors may say, he had a real love and understanding of the language and fine things that make literature. I say, with regret, that I believe I shall address this appeal without avail to the right hon. Gentleman. In friendship and courtesy I will not give reasons why I say that. But well may the shades of Milton, of Caxton, of Sheridan and of Charles Dickens, and of those brave men, who in the last century fought and won the principle of free enlightenment, groan in their honoured graves to-day to think that that lamp which they hung on the walls of Westminster has been clumsily torn down at last by a Chancellor of the Exchequer, who, at this hour of civilization, sees no important distinction between boots and books.

6.5 p.m.

Sir Joseph McConnell: We have heard a good many speeches this afternoon, and there have been one or two very depressing speeches. It was said by many that there was a gap to be filled. I think that it would be better for this Committee if we tried to fill the gap. I noticed that one of the slogans in one of the newspapers on the morning after the Chancellor of the Exchequer made his speech was "Plan to check buying wave," and I began to think who were the people who were buying. I did not know of any of my intimate friends who were buying. I have taken a good many walks during the last fortnight through Mayfair where every other house is for sale, with no buyers. In fact I am told


by those who live in Mayfair that the male topic everywhere is how to get their clothes turned. There is no buying by the man-in-the-street. He has not the money with which to buy surplus things any more than has the man of Mayfair. You hear tales being spread, which, if they are right should be admitted, and if they are wrong should be denied. You hear tales from the Orkney Islands to Land's End that building contractors' workmen are receiving £8, £10 and £12 a week. If that is so, these must be the people who are spending.
One also hears tales—and they come from a seemingly reliable authority—that dockers are getting very high wages and that when they work on holidays they get double wages, and if they work overtime on holidays they get four times their ordinary wage. We shall not fill the gap if this sort of thing is going on. I am sorry that the Minister of Labour is not present, because he has made a very good shape-up so far, but when the next interim Budget comes along he will have to give an account of his stewardship and state how he has helped the Chancellor of the Exchequer to close the gap. His responsibility then will be at least equal to that of the Chancellor. Facts have to be faced. We cannot go on paying these big wages. If the war goes on for two or three years, the people who are being taxed to-day will be exhausted, and the people who get the big wages will be living on their own tail.
The right hon. Gentleman the Minister of Labour must tell labour that the huge war-time wages in some trades must be stopped. I know the working men of this country, and if they are told the truth, they will play the game. The new finance of the hon. Member for Lowestoft (Mr. Loftus), which I understand to be a mixture of Douglas credit and post-Dr. Schacht Germany, will only lead them up the garden to disaster—

Mr. Loftus: The hon. Member is misquoting me.

Sir J. McConnell: I have got to the point I want to make. I did not like to come to it crudely. What my hon. Friend said was that all the fault lay with the great King William III after he came to the throne. I would ask him whether he agrees with the Stuart finance or that established by William III? Which does he like?

Mr. Loftus: The Stuart finance.

Sir J. McConnell: You like the brass money of James II. My hon. Friend said it would be well if the power got back to the Crown. I would advise my hon. Friend to read again the "Drapier's Letters" and find out why the Crown allowed another to issue those spurious halfpennies. If the Government start any sort of fancy finance, the Bank of England will have to be brought in at the end to liquidate such finance. When I hear people talk about the fancy finance in this House, it reminds me of when I was a boy. There was a great showyard in Belfast, and we used to go there on Saturdays. There was a man there who could pull out teeth without causing any noise because he had a very good band playing. The other thing was that he had a great hair restorer, and his words were these: "Place it on the centre of your left hand, and then on the part of the head that is bald, and in the morning the hair will be growing up the bedpost."

Mr. Denville: That was Sequah.

Sir J. McConnell: All that we have heard here this afternoon about fancy finance is in the same category. In my opinion the suggested fatuous expedients to evade the real issue are as fraudulent as Sequah's hair restorer.

6.14 p.m.

Viscount Wolmer: I do not propose to follow my hon. Friend in the details of the very interesting and amusing speech to which we have just been listening, but I will try to bring the Committee back for a few minutes to the main centre of the problem with which the Chancellor of the Exchequer has been attempting to deal. In nearly every quarter of the Committee there has been a full realisation of the intense gravity of that problem, and an attempt to look at the problem from a national point of view, although we may hold very different opinions as to the remedy. The one exception to that attitude this afternoon has been, I regret to say, my hon. Friend the Member for Oxford University (Mr. Herbert). He made no attempt at all to deal with the national economic or financial position.

Mr. Herbert: rose—

Viscount Wolmer: I will allow my hon. Friend to interrupt me on a question of fact but not on a question of opinion. I listened to his speech with great enjoyment and I hope he will listen to mine, although I am afraid I cannot promise him the same amount of enjoyment. My hon. Friend made no attempt to deal with the national financial and economic problems but gave a brilliant lecture on the wickedness or even the obscenity of taxing books.

Mr. Herbert: That is not so.

Viscount Wolmer: I would say with all respect to my hon. Friend that it is very easy for those who are associated with literature to regard their profession as so important and sacrosanct that it ought to be treated differently from any other form of activity. That, I submit to the Committee, was the plea which my hon. Friend made.

Mr. Herbert: I thought I had made it clear that I was speaking mainly as the Senior Burgess for Oxford University, a great educational institution to which the Noble Lord used to belong, and it is really a gross travesty to suggest that I was speaking for a kind of selfish profession.

Viscount Wolmer: Nobody is better qualified to talk on this subject than my hon. Friend and to represent the case for literature against any taxation on books. All I am saying is that he has not made out a case for the treatment of this form of national activity in a different way from any of the other important activities of this country.

Mr. MacLaren: You are imputing a personal motive. It is not fair.

Viscount Wolmer: My hon. Friend knows me much too well to think that I would ever imply a personal motive to him. That was not the attitude about which I was complaining. I was venturing to rebuke a famous exponent of literature for saying to the House of Commons "This is holy ground on which you must not tread." That is an attitude which the Chancellor of the Exchequer cannot admit, although I have no doubt that he would very much like to do so. My hon. Friend speaks as a representative of Oxford University but if he goes to his constituency what will he find

going on there? He will find that Oxford University has shut down its normal peace-time activities and has now switched over a very high proportion of the great abilities and knowledge to be found there to national war work, as it did in the last war. That is absolutely right; that is the part which one would expect from Oxford University in these circumstances. If the doctrine of my hon. Friend is pushed to its logical conclusion, he would expect to find Oxford University going on exactly in war time as it does in peace time. But his constituency is not doing that, and I am sure he would be the last person who would ask them to do so. He himself said that he has stopped writing books and is serving in His Majesty's Forces. That is symbolic of the situation with which the Chancellor has to deal, which is that all normal peace time activities which are not essential to the winning of the war must be curtailed in order that the war effort may be expanded. That is another way of saying that consumption must be curtailed. The consumption of books must be curtailed just as much as the consumption of other things which are necessary to human life as we understand it—and I certainly put books in that category. The Chancellor of the Exchequer must assist in the curtailing process by this tax on the purchase of all commodities.
I was very much interested in the speech of my hon. Friend the Member for East Ham, South (Mr. Barnes). He certainly recognised the national position but said that in his view the Purchase Tax was altogether evil, and hinted that a better and juster way of curtailing consumption was to carry Income Tax down further than the Chancellor proposes, and rate the lower incomes more steeply than he has done. I agree that the Chancellor has not put a sufficient tax on these incomes, if only for the reason that in a large number of cases they are the incomes which have been increased since the war began. Where people have increased their incomes they are naturally and quite legitimately desirous of indulging in expenditure and consumption of which they previously denied themselves. Therefore, from the point of view of the limiting consumption, I believe the Chancellor of the Exchequer would be doing more by taxing well-paid artisans than he can possibly do by adding 9d. to the Super-tax. He will not limit consumption to the same extent in


that way because the people paying Super-tax will merely economise by reducing the number of people they employ. Most of the people they employ do not earn wages of £4, £5 or £6 per week, and while great hardship will be inflicted on those who lose their employment, there cannot be the same reduction of consumption as there would be by the method of direct taxation of highly-paid artisans. I do not think, though, that that would really cover the problem because even if every class was taxed up to the hilt, it would still be necessary to try to guide the purchaser to invest as much money as possible in War Savings Certificates and War Loans than expend his salary on consumable goods. At the present moment we have no alternative. We must induce people to refrain from consumption, books and everything else, and cut down their consumption to the minimum, and save what they can and put their money into War Loans, thus enabling the maximum effort to be concentrated on the war.
The hon. and learned Member for Montgomery (Mr. C. Davies), who is always very fertile in his constructive suggestions, did not shirk the problem but I think his solution was one that would be quite unworkable. He wanted to control all production and pool all retailers, so that the retailer whose business had disappeared could share in some of the prosperity of the retailer whose business increased. As I listened to him, I felt it would be perfectly impossible to carry out such a scheme, even if we had all the leisure of the piping times of peace with which to do it. The number of officials required would be legion; there would be as many officials as non-officials, and at the end you would have the most perfect system of Socialism which any hon. Member can imagine, something more bureaucratic than anything which exists in Russia or Germany to-day. Therefore, I do not think the House of Commons can really regard that suggestion as practicable. The only way in which we can guide the energies of the nation into the right channels, induce them to refrain from consuming and put all their efforts into war production, is through taxation.
Here let me say that I am very sorry my hon. Friends of the Labour party have shown so little sympathy with Mr. Keynes. I feel that the case he has put forward has never really been answered.

People have said they do not like it. Well, all forms of taxation are unpleasant. The great merit of Mr. Keynes proposal was that there was some hope of wage earners getting the benefit of their war taxation in peace time. It was a most ingenious and attractive suggestion—I do not say it was unattended by grave difficulties—but I think his plan has been put aside more on account of the novelty of the proposal than of any inherent weakness in the scheme itself. These are not times when we can afford to reject any proposal or plan merely because it is novel, and I congratulate my right hon. Friend the Chancellor of the Exchequer for what is novel in his Budget while criticising him for what is old and trite. He must get beyond increasing the beer, tobacco, whisky duties and Super-tax and must think of new ideas if he is to deal with the problem which confronts us. He has not dealt with it, and I do not think he claims to have dealt with it. I urge him to take his courage in both hands and put frankly to the people of this country what he and his advisers consider to be the best plan to enable us, as a nation, to withstand the stress of this war. I am sure the people will respond to him if he gives them the lead.

6.28 p.m.

The Financial Secretary to the Treasury (Captain Crookshank): As far as I know, it has never occurred before that a Financial Secretary to the Treasury should be connected with four Budgets in the space of 15 months—and each Budget has seen the imposition of heavier burdens on the taxpayers. Each time, criticisms have been raised from a different angle and each time I have, on behalf of my right hon. Friends, done what I could to assist in replying to these criticisms. I hope, however, that I am not qualifying as a sort of glorified Vicar of Bray. Nevertheless, the fact remains that circumstances on each of the four occasions have rapidly become different from the circumstances of the immediately preceding Budget and I think my right hon. Friend on this occasion—his first occasion on a matter of this kind—can be reasonably satisfied, even if not completely satisfied, with the tenor of the speeches which have been made here.
If one may look back, at the time when my right hon. Friend's predecessor in-


troduced the first war Budget in September last everybody was then full of praise, because it was so early in the war, and so unexpectedly early. Nobody had anticipated that a Budget could be produced so soon. Everyone was grateful for the speed that was being shown in putting on at once very heavy taxation. Then, in the ordinary Budget of this year, in April, the criticism which my noble Friend had to face was not so much that taxation was not very big. The fact that he had already announced in the previous September the increase in the Income Tax seemed slightly to have softened the blow—until the actual moment when the assessment came out—but for the time being the additional tax impositions rather cast into the background the main criticism which emerged, namely, that he was not expecting to spend as much money as hon. Members and some of the financial pundits thought he should. On the present occasion, again, in so far as there is any criticism of my right hon. Friend in the third war Budget, it is not that he is not thinking that vast sums of money are going to be spent, but that he is not finding enough taxation towards that end. The criticism changes with the change in events, and I think, in common fairness to my noble Friend and to the last Budget, which I helped to defend, it is only right to say that, even if hon. Members did at that time think he was not budgeting for sufficient expenditure in the current year, he always made it quite clear that the figures that he gave were provisional and in the nature of the case could only be a guess, and, of course, it is true that the subsequent changes which we now see quite clearly must involve heavier expenditure during the financial year had not then occurred. The Low Countries had not been invaded and France had not disappeared as a belligerent. It is only right to say that with regard to the first Budget proposals of the year enshrined in the Finance Act so recently passed.
But, so far as my right hon. Friend is concerned at present, I have seen a whole collection of expressions of opinion about this Budget. While it is true that some of the writers say that the taxation of the better-off classes has reached practically its limit, others take a contrary view. Some say that taxation falls disproportionately on those with smaller

incomes, and others say particularly the Income Tax should be brought further down the list of incomes. In fact, as so often is the case, these criticisms cancel themselves out to a very considerable extent, though, of course, both sets of them are indicative of great bodies of opinion. So far as expressions of opinion from outside the country are concerned, however, if hon. Members will look at the earlier telegraphed comments from the United States and the Dominions, they will see that the outsiders, who sometimes see quite a lot of the game, are impressed, not only by the size of the burden which my right hon. Friend is asking the Committee to approve, but also by the way in which his speech was received in this Committee the day before yesterday. A comment in one New York paper is, "Commons approves taxation without a whimper," and in another:
Nothing could more convincingly demonstrate the determination of the British to throw the last ounce of their strength and fortunes into the defence of their country.
It may very well be that we have not reached the limit of taxation, but it is at any rate some satisfaction to find that the sacrifices now being made are considered by those outside to measure our grim determination in this matter of bearing the sacrifices necessary to win the war. I think the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) yesterday more or less agreed with that aspect of the question.
I have been asked a considerable number of questions with which I will try to deal. Of course, some of the larger issues, more especially those raised by my hon. Friend the Member for Lowestoft (Mr. Loftus), would require a great deal more time than there is at my disposal. I should like to read his speech again, because, like ancient Gaul, it was divided into three parts owing to interruptions outside his control, and my recollection of it is not so lucid as it ought to be to deal with such an abstruse subject. First of all, I will deal with one or two points with regard to Income Tax. I should like to bring up to date a comment which I made in the Budget Debates in April. Criticisms were made at that time by the then Opposition that a sufficiently heavy burden was not being put on the higher ranges of income. I said it was interesting to compare at what rate of income chargeable to tax persons lost,


through taxation, half their total income. See how rapid has been the change. At this time last year, under the impact of the last peace-time Budget, half a single man's earned income was taken from him if his total income was £17,000. In April, after the first Budget of this year, half such a person's income was taken at £8,500. Now, to complete the picture, I have to say that, as the result of the changes in Income Tax and Surtax proposed this week, the taking away of half the income occurs at £5,500 approximately. Whatever else may be said of people who are in that region of income, this means a most astonishing change of circumstances in only 12 months, and the right hon. Gentleman the Member for East Edinburgh recognised that point, not only in the speeches that he made in April, but I think he repeated it yesterday that, whether limits have or have not been reached, there are limits to the amount that can be taken without allowing a period for readjustment.
While browsing on these figures, I came across another consideration which shows how rapidly circumstances for this class of the population are changing. Of course, the total income, the figure which comes first in these columns, is a figure of income which no one ever received, because since living memory taxation has been such that that is merely the income from which the calculations are made. But this, I think, is the astonishing fact—it certainly shows the changes that are occurring in the ranges of income of £25,000 and above—that what is left this year as a result of this Budget to persons above that income is in practically every case half what was left to them last July. In the case of an income of £25,000, what was left last July was just under £12,000 after all the taxation had gone. What is left under this July's proposals is just under £6,000. So it goes on. It shows the difference, and it shows another thing which my right hon. Friend must unfortunately keep in mind, and that is that people who have had such changes come to them are not going to be able at present to make loans to the State on a scale which was possible for people who, 25 years ago, had an income of £25,000. That is why so much stress is being laid, and must go on being laid, on the campaign in which all Members of the House have been good

enough to take part up and down the country for the War Savings movement. Now that the big money especially is not where people thought it used to be, in order to carry on successfully the borrowing campaign it must be brought home to those who now have it, and my right hon. Friend is quite certain that all Members will do all they can to help on the campaign carried out under the very able leadership of Sir Robert Kindersley and in which those thousands of voluntary committees of people of all sections of the community and all kinds of political and other views co-operate.
Now, the raising of the standard rate during the financial year instead of at its beginning makes a difficulty, and, while a statement has already been published in the Press, the Committee will perhaps allow me to repeat some part of what was said, not only in order to have it on record so that they can conveniently turn it up, but because it is important that I should say what my right hon. Friend intends to do on this point in the Finance Bill. The increase in the standard rate to 8s. 6d., although it applies to the whole Income Tax year, is of course not legally operative until the date of the passing of the Finance Bill into law so, strictly speaking, tax might legally continue to be deducted up till that date at the rate of 7s. 6d. This may lead to some complications in the case of companies which have already prepared warrants, because they may already have made their preparations showing a deduction by reference to 7s. 6d. at a date which might be after the passing of the Finance Act. No one knows exactly on what day that is going to be, for if we do not know in the House, people outside cannot, and they may find it impracticable at this stage, possibly amongst other things because of the waste of paper, to destroy those warrants and make out new ones. Therefore, it will be necessary for the Finance Bill to contain a provision legalising deductions by reference to the rate of 7s. 6d. though they are made after the passing of the Finance Act, but with the proviso that that cannot carry on beyond 1st September. That ought to give sufficient time to deal with that difficulty. Also, in view of the fact that the increased rate of 8s. 6d. is to apply for the whole year, adjustments will be necessary to make good under-deductions of tax where tax has been deducted by


reference to the tax of 7s. 6d. from payments made between 5th April, 1940, and 1st September, 1940, and the Finance Bill will contain provisions relating to those adjustments. In order to reduce as far as possible the necessity for subsequent adjustments, it may be found convenient in the case of payments to be made before the passing of the Finance Act—when legally 7s. 6d. is all that should be deducted—to arrange for deduction by reference to the rate of 8s. 6d. It will be necessary to put all that right in the Finance Bill.

Mr. Pethick-Lawrence: I take it that in the main, subject to these points about dates, the provisions for dealing with dividends paid on or before the date of the passing of the interim Budget will follow broadly the same lines as were followed in the Budget in September, 1931, which also was an interim Budget and raised the same questions.

Captain Crookshank: That is so. Several hon. Members have asked questions about the deduction at source of Income Tax due in respect of salaries and wages, and I am glad to have an opportunity of saying something more detailed on that matter. The new proposals have two objects. First, as the rate of taxation increases it makes the burden of the lump sum payments on 1st January and 1st July increasingly difficult for the taxpayer to bear, and therefore, it reduces the hardship if some system for spreading the payments more evenly during the year can be arranged. Secondly, from the point of view of the Exchequer, there is an advantage that we should get more of the Income Tax spread over instead of concentrating the payments too much in large lumps at long intervals. Of course, there is nothing very revolutionary in this, because it already exists as a method of paying Income Tax on the emoluments of officers paid out of public funds in the Fighting Services and the Civil Service. I have lived under that system all my life, and I can assure hon. Members that any fears which they may have in this respect are groundless. It is as well to remember, however, that all we are proposing to deal with is the payment of the Income Tax due under

Schedule E in respect of income arising from employment. Any other tax liability which an employé may have in respect of any other income which he may possess will not be affected.
This is the way in which the system will work. The assessment will be made, as it is now made, upon the employé, and he will get the usual notification. If he has any question to raise about the correctness or otherwise of the assessment, it will be a matter for him to take up with the inspector of taxes, but assuming, as is the normal case, that there is no disagreement between the employé and the Income Tax authorities, the Collector of Taxes will send a notification to the employer, who will not have had anything to do with the assessment, who will be completely ignorant of how the tax has been computed, and who will merely receive the notification from the Collector of Taxes of how much tax is due. I repeat, the employer will know nothing about the employé's circumstances, how the tax has been arrived at, what allowances there were or were not, and so on. The scheme will be compulsory for all individuals receiving income from employment, whether salaried staff or wage-earning staff, whether company directors or factory workers. It will come into force for the current year; that is to say, it will apply to the tax which is due on 1st January next. After the assessment has been made, the employer will receive notification of what he has to deduct.
There are two big classes of persons concerned. First, there are those who are concerned with yearly assessments, and secondly, there are the manual workers whose assessments are on a half-yearly basis. With regard to the first of those classes, those assessed on a yearly basis, the notification will be received by the employer in October, and the deduction of tax due on 1st January will be made in the months from November to April. The employer will get the notification from the collector of taxes, he will divide the sum up among the number of pay days, and make an equal deduction on each occasion. Then, in April, he will receive the notification of what is due for the next July instalment, and that will be deducted in the months from May to October. Secondly, there is the very large body of manual workers who are


weekly wage earners, and who are assessed in a different way. They are not assessed in the same way as ordinary taxpayers, but half yearly on the basis of the income which they have earned in the half year just closed. That is the existing law. In their case, the tax on their earnings from 5th April to 5th October this year will be assessed as soon as possible after the end of that period, that is to say, after 5th October. Clearly it cannot be done in sufficient time for any payments to be made in November. The tax is due, as in the case of the others, on 1st January, and therefore, my right hon. Friend's proposal is that the notification should be sent some time before that date and the deductions will then be made in the six months beginning 1st January and ending on the 30th June. The same will apply to the next half-yearly period. In their case, therefore, no deductions will be made until the tax is due, that is to say, 1st January, and the tax will be spread over the 12 months beginning on that date. One has to recognise that in the case of persons employed weekly their wages may be subject to considerable fluctuations, and there is there a difficulty which has to be watched. I cannot give all the details now, but what is proposed is that, in order to prevent hardship, no deduction is to be made which would reduce the net earnings in any week below £2.
To return now to the position of the employer, all that he has to do, having received the notification, is to divide the money up in equal instalments as I have described, and collect from the weekly, monthly or quarterly payments. One hon. Member asked what will happen if a firm goes bankrupt. If that happens, nothing will occur to the detriment of the employé who has paid his tax, but as far as the firm is concerned, the tax which it has collected will be a debt due to the State. The employés position towards the Revenue will not be worse one way or the other. The employer will have to pay to the Exchequer the amount which he has collected during the month not later than the 15th of the next month, so that the money will be passed so far as practicable straight to the Exchequer.

Mr. David Adams: What is to happen in the event of an employé being dismissed?

Captain Crookshank: In that case, the employer will not be paying him. It is not only a question of an employé being dismissed—he may change his employment. Such an employé may already have had some deductions made while employed by a firm. If he leaves that employment, that firm will have finished with him; the amount of tax which has been deducted will have been recorded and will fall back to the collector of taxes. The collector of taxes will then seek to collect the balance of what is still due either directly or by making arrangements in exactly the same way for the next employer to be notified of how much tax remains outstanding; and the deductions will then be made in the new place of employment.

Sir Frank Sanderson: I am fully in agreement with my right hon. and gallant Friend's proposal, but in the case of a large number of junior employés, when it is known that they will not be subject to any tax, will it be necessary for the employer to deduct Income Tax in their case?

Captain Crookshank: There is no question of an employer ever deducting anything of his own accord. All that happens is that when a person who is subject to tax has been assessed, when there is no dispute about how much is to be paid, then, and only then, is the employer notified of the tax burden in respect of that person, and the deduction is made. There might be some dispute about the assessment which would drag on so that the notification would not reach the employer before the six months began. It is hoped to get the notifications out by October and for deductions to be made in November, but as a result of a dispute it might be that the employer would not get the notification for two months, for instance. The deductions would then have to be made at such a rate that the complete amount of the half year's instalment would be collected by the end of the half year. Again, if a matter went to appeal, it would be possible for the employé to ask that the amount of the tax which was not in dispute should be deducted in this manner, and that could be done. Finally my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) asked what will happen if there is any question of refunds. That


will have nothing to do with the employer. Any refunding that has to be done will be done by the Income Tax authorities in the ordinary way.
I should like now to deal with two points concerning the Purchase Tax which were raised by the right hon. Member for East Edinburgh. The right hon. Gentleman was anxious about forestalling, and on that point I will give a warning. The Purchase Tax Bill which was introduced in the House was discharged on the same evening as the Budget Resolutions were agreed to in Committee. One of the Budget Resolutions enabled a tax on purchases to be made. But neither the Committee nor the country need think that because the Purchase Tax Bill was withdrawn, every word and comma of it was withdrawn. Far from it. The general machinery and arrangements which were then outlined mutatis mutandis will no doubt find their way into the legislation that has been foreshadowed by my right hon. Friend. Therefore, if hon. Members like to look up the Purchase Tax Bill which has been withdrawn, and study Clause 24, they will see that there was a provision to prevent deliberate forestalling in this way, that the Commissioners, if they were satisfied that there had been stocking up between a wholesaler and a retailer on a scale out of proportion with the normal volume of business, might declare such part of the deliveries which had been made before the coming into operation of the tax as they thought fit to have been made after the coming into operation of the tax. That warning was clearly designed to deal with any gross case of exploitation which might have occurred between the time when my right hon. Friend's predecessor first announced the proposals and the date on which the tax comes into operation. That warning still stands, and I hope it will be noted by anyone concerned.
The other point which the right hon. Gentleman raised was that the Purchase Tax might lead to an increase in the retail price beyond the value of the tax. My right hon. Friend the President of the Board of Trade assures me that the position, so far as it concerns goods to which the Prices of Goods Act has been applied—which in effect covers practically everything with which the Purchase Tax is concerned—is that it will be

illegal for a retailer to charge any percentage on the tax itself; he can only under the law, add the actual amount of the tax. A further point he raised was whether a retailer could now write up his goods to future replacement costs. The answer is, under the Act a trader can bring into account only the cost of goods actually in stock and those on order under firm contract. Therefore, he cannot add anything in respect of the tax to the prices of goods already in stock, except in so far as he may be averaging the cost of those goods and of the goods on firm order. I think that answers the points put by the right hon. Gentleman the Member for East Edinburgh. In order that there shall be no misconception in the future, I should like to point out that when the hon. Member for East Ham, South (Mr. Barnes) spoke of a tax of 12 per cent. he was talking about an average calculation my right hon. Friend gave in his Budget speech. The Resolutions, however, talk about a tax at the rates of one-sixth and one-third of the wholesale value.
The hon. and learned Member for Montgomery (Mr. C. Davies) asked a statistical question of a financial nature. He thought the figure of expenditure was larger than it should be and he was not quite sure what the position was of trading accounts, such as in the case of the Department of the Ministry of Food. What appears in the Vote of Credit expenditure is the actual trading, services, purchases, etc., less receipt of sale. It is only the net figure which appears there, and not the gross cost. My right hon. Friend wishes me to say something à propos of the various questions asked, both now and at Question Time, regarding the Tobacco Duty. Hon. Members in all parts of the House have spoken of the hardship, as they say, which will accrue to soldiers, airmen and the like, as a result of the heavy increased taxation in this field. Hon. Members will realise that that question involves a great many factors, and that I cannot give them any kind of answer now; but I can say that my right hon. Friend will obtain the views of the Service Ministers on the matter, in the light of the increases he has proposed in this Budget.
I think that I have now completed all I wish to say except for one final word. Hon. Members in all parts of the House have very properly spoken of the sacrifices which the war is entailing on every


section of the community and which will inevitably continue. Members in all parts of the House have reminded us that we should do what we can to check unecessary consumption, because that is one of the ways in which we can most safely finance the war. That conception, however, has by no means permeated into every mind.
I was rather distressed to find, yesterday, in one of the newspapers a home budget showing the effect of the new taxation imposed by my right hon. Friend as compared with the taxation last week. The home budget was for a husband in receipt of £500 a year with a wife and two children. I am not contesting the figures they worked out, but whoever concocted them evidently did not think it was curious at a time like the present to anticipate such a family envisaging in the next 12 months that the husband would buy two suits of clothes and two pairs of shoes, and that his wife would buy three best frocks and six other frocks; that there would be a considerable expenditure on real silk stockings, and that the wife and daughter between them could reasonably spend as much as £5, this year in time of war, or 1 per cent. of the family income, on cosmetics. If there are such people contemplating an expenditure of that kind—that is to say, nine dresses for one woman—it seems to me that there is complete misconception of what we are up against. That sort of thing may have more circulation or less circulation, I do not know. But I do think that those of us who are concerned here with watching national finance, whose business it is to try to give a lead to the nation in regard to what should be done, should do what we can to point out that what is left over, after the necessities of living have been provided for, should be lent to the State for the period of the war. There should be no question of anybody, whether the income is £500, £5,000 or £500,000, spending that sort of proportion on clothes and luxuries of the kind I have indicated. And so I am quite sure that my right hon. Friend is right in leaving to the consideration of Parliament the Resolutions upon which he has founded his Budget.

Mr. Herbert: May I ask if the remarks I addressed to the Committee are so wholly contemptible that they deserve no

reply whatsoever from the Financial Secretary?

Captain Crookshank: No, they are not contemptible in the sense the hon. Member for Oxford University presumably means. But there are 18 Budget Resolutions. He happened to deal with one very small, however important it may be to him, part of one Resolution which will come up for discussion at a later stage. I thought that as we had arranged to continue with other business we should not take up any more time at this juncture with the matter on which he has spoken to-night.

7.9 P.m.

Mr. Muff: I am sorry the Noble Lord the Member for Aldershot (Viscount Wolmer) is not in his place. I listened with interest to his somewhat personal attack upon the Senior Burgess of Oxford University (Mr. Herbert). In this regard, Oxford University is, I think, well able to look after itself, but I am concerned about "Aldershot University" and similar universities which have sprung up in the country with between 1,000,000 and 2,000,000 graduates and undergraduates. As one whose duty it is to visit these places in my capacity as a welfare officer, I find that at these new universities all over the country they are asking for books. They are not content with singing choruses like "Roll out the Barrel," and similar hymns and anthems. I wish to put the positive suggestion to the Chancellor that before he fully makes up his mind he should consider exempting books below the value of 1s. or 9d. Those 2,000,000 or 3,000,000 men who are now in our universities, as I call them, learning a new technique are more and more in need of relaxation. They are reading more and more and I am assailed on every hand with demands for books and magazines.
If the right hon. Gentleman could exempt books from the Purchase Tax—not cheap and nasty literature, but cheap literature of the highest standard—he would be doing these men a good service. I am glad that the Financial Secretary has given some hope of a concession with regard to tobacco for the soldiers who are now, not in a British Expeditionary Force abroad but in a great expeditionary force at home. The late Chancellor was able to solve the problem of giving a ration of cheap tobacco to men who are


fighting overseas, and it is not beyond the wit of any man, especially of the present Chancellor, to give a modest ration of tobacco to those who are in an equally important expeditionary force, a crusade even, at home.
Question,
That the law relating to the national defence contribution be amended (as respects all accounting periods beginning on or after the first day of April, nineteen hundred and thirty-nine, and so much of any accounting period beginning before that date as falls on or after that date) so as to disallow deductions in certain cases in respect of interest, annuities and annual payments, and in respect of payments under certain contracts or arrangements relating to indemnification in respect of war damage,
put, and agreed to.
Resolution to be reported upon Tuesday next; Committee to sit again upon Tuesday next.

Orders of the Day — WORKMEN'S COMPENSATION (SUPPLEMENTARY ALLOWANCES) (NO. 2) BILL.

Considered in Committee.

[Colonel CLIFTON BROWN in the Chair.]

Orders of the Day — CLAUSE 1.—(Supplementary allowances to workmen entitled to weekly payments.)

7.15 p.m.

Mr. Isaacs: I beg to move, in page 2, line 4, at the end, to insert:
Provided that this paragraph shall apply to any such child over the age of fifteen years who is receiving full-time instruction at any educational establishment or undergoing training for any trade, profession or vocation, or unable to receive such instruction or training by reason of physical or mental infirmity.
This Amendment has three purposes. The first is that the children's allowance should be continued for those children who are undergoing instruction in an educational establishment. Hon. Members know many instances of men who have been injured and who have children of school age. Some of them continue at an educational establishment until they are 16, and some go beyond that age. Cases come to me of men who are injured, whose incomes are seriously reduced and who are compelled to stop education for their children after 16. Some scholarships go beyond 16 and take

the youngsters up to the universities. I know many cases where the education of such children has had to be stopped. That is not only a loss to the child and a grievous disappointment to the parents, but it is a considerable loss to the State, because these bright children of working-class people who have the ability to win scholarships and to continue their education, often turn out to be useful members of the community.
Secondly, we ask that the allowance should be continued for those who are undergoing training for a trade or profession. Many boys and girls, especially boys, when they take an apprenticeship binding them for seven years or less, receive a very low wage in the early years. It is often not sufficient even to pay their fares from their homes to their work. Nothing is left for their food and clothing. We think, therefore, that in such cases, where no actual benefit to the home is given by the employment of these young persons, the maintenance allowance should be paid. Some children get a professional education by being articled to solicitors, architects and accountants. In those cases the parents have to pay a fee on the articles and the children get nothing for some years. We consider that it is justifiable to ask that these cases also should be eligible for maintenance.
Thirdly, there are those who are suffering from physical or mental infirmity. There is the greatest need for calling attention to this kind of youngster. Some are helpless cripples and some are infirm in mind. They are sad cases and it is fair to say that they are the greatest care of their parents. Parents are more anxious for these children than for those who are more able to take care of themselves. It is not reasonable that they should suffer because the father has met with an accident at work, and the allowance will be of great benefit to them. If the maximum of 5s. is given to the injured worker he will have been earning at least £3 a week. In ordinary circumstances he will get 30s. compensation, and the 5s. allowance will bring it to 35s. Even then he will be receiving 25s. less than he was earning, and the additional 4s. allowance, or 3s. in the case of the third and other children, will be of material assistance to him. If the allowance stops when the youngsters reach the age set out in the Bill, and they go out to employment on a wage that will not


help to maintain them, the hardship on the family will be felt very keenly. I submit with respect that the cost of this addition would be relatively small while the relative advantage to the family would be very great.

7.20 p.m.

Mr. T. Smith: This is not the first time that we have discussed a proposition of this kind. When the principal Act was at the Report stage, about 1923, the House was so interested in the case of children attending secondary schools that there was actually a free vote on an Amendment dealing with their case, and we just failed to carry it, the majority against it being, I think, 22. At that time Members on all sides suggested that it would be an advantage to the State to have children going on to the secondary schools and that an injured workman's children ought not to be handicapped because the father had been injured and was receiving compensation. We lost the case then, and I am not sure about the chances of this Amendment, but I think there are good grounds why it should be accepted. If the Government cannot accept the whole Amendment I hope they will at least meet the case in one respect by agreeing that when a child is receiving education at an ordinary educational establishment, compensation in respect of it should continue to be paid up to 16 years of age. I am sure that if the Members on the Treasury bench at the present time were to express their own views they would accept the Amendment.
In the last 15 or 16 years, there has been a great change in the methods of dealing with children. I have recalled the Debate in 1923, and I also remember that in the Widows', Orphans' and Old Age Contributory Pensions Act we did get a Clause which enabled the allowance to be paid up to 16 years of age, but I do not want the exact wording of that Clause to apply here, because I believe the age limit is 14 years and it only goes up to 16 if they are receiving full-time instruction. People make great sacrifices to send their children to secondary schools, and it is a pleasing feature of our education system that so many people do so, and if a parent falls by the way through being injured at work and the income is on that account reduced we ought to grant this allowance of 4s. a week for any child who is receiving full-time education at, say, a

secondary school. I hope that we shall have from the Under-Secretary for the Home Department not merely sympathy for this Amendment but at least a promise, if he cannot accept the Amendment as it is worded—because it may be too wide—that he will give consideration to those children who are receiving secondary education and that the allowance in respect of them will be continued up to the age of 16.

7.25 p.m.

Mr. Tomlinson: I should like to put in a word on behalf of the children of an injured workman who are between 15 and 16 years of age. I have the privilege of being the chairman of the Scholarships Committee of a large county which provides a good many scholarships for children of the working class. Not only are great sacrifices made to keep the children at school, but the sacrifice called for in the last year at school is greater than at any other period. The Lancashire County Council, along with all other county councils, I think, provide for that in this way, that in the fourth and any subsequent year the maintenance allowance is on a more generous scale; and that points to the need for greater assistance in these cases. The number of injured workmen who have children at school and would be benefited under this Amendment would be small, but that is all the more reason for accepting it. This is not the first occasion on which this particular point has been overlooked. When the war broke out and the children of serving soldiers were being considered, the wording of the first Royal Warrant that was issued was the wording in this Bill, and it was on representations from education authorities all over the country that an alteration was made and children up to 16 years of age were brought in. I think it is true, also, that in the case of unemployment insurance benefits this age is also accepted, because it is "after 15 years" so long as the child is receiving full-time instruction in school that the benefit is continued. If the necessity for it is realised in that case I think there is a good case for it here.
But I would base the claim primarily on the ground that this is the age when the money is most needed. During the last two years I have had many unpleasant tasks, and the most unpleasant


in connection with education administration has been that of signing forms allowing children to leave school on account of the poverty of their parents when they really ought to remain. It is a heart-breaking position when the child has kept at school until 15 years of age and then the economic position of the parents makes it impossible for the child to finish its education and to sit for the school certificate. I never sign that form without feeling that I am doing an injustice to the child. If we accepted this Amendment it would relieve the position in the case of injured workmen.

7.28 p.m.

Mr. Kenneth Lindsay: I rise to reinforce what my hon. Friend the Member for Farnworth (Mr. Tomlinson) has said. In my constituency there is no sadder sight than to see at the corner of the rows of mining cottages injured men who have had a lump sum paid to them in compensation and are pretty well destitute for the rest of their lives. I can speak with a little authority on the second point. All over the country to-day children are leaving school at 14 years of age and how much more difficult will it be for those children who have nothing to fall back upon to remain for the extra two years, as they ought to do. The Post Office and other Government Departments are taking them away at the age of 14 and 15. Children cannot stay at the secondary schools, with all the extras which are wanted, without something from home, and the case for the Amendment is a very strong one. The concession would not affect a large number of children. In my own constituency I do not think there are large numbers who go on to the academy and leave; but without this concession we shall deprive a child who has won a scholarship of getting the full benefits which it ought to receive from the secondary education.

7.30 p.m.

Mr. Collindridge: I wish to say a few words in support of the Amendment. This is an excellent opportunity for hon. Members to show that they have no bias against people who are unfortunate enough to have to work in hazardous occupations. In the mining industry before the war, the average accident rate relating to those who were injured sufficiently to receive compensation showed

that a miner was injured once in every four years and five months. Since the war that rate will be higher and will be equivalent to a miner being injured in some shorter period. I would ask the Committee to reflect what that means. Like the hon. Member for Farnworth (Mr. Tomlinson) I have had the misfortune to have people come to me to release their children from the secondary school because there has been an accident to the breadwinner. They have had to ask for their children to be taken away. When that happens it is a tragedy.
Hon. Members now have a chance to show that they want these educational opportunities to continue. Most workers in the mining industry desire that their children shall be educated to engage in some profession which is less hazardous and prone to accidents than mining. If we have these children embarking upon education up to the age of 14, it is unjust and distinctly unfair that their chances should be taken away because of an accident to their parents. Surely, in these days of war in particular, when we are hoping that the margin between those who are privileged and those who have always been unprivileged may be lessened, we may ask here, not for absolute equality, but merely that children who have shown that they can assimilate a higher education should have an opportunity to continue that education, notwithstanding that their fathers may have been the victims of accident.

7.32 p.m.

Mr. Arthur Jenkins: I would like to add a word to the appeal that has been made that the Minister should accept at any rate the principle of the Amendment. There can be no opposition in any part of the Committee to that principle. Those who sit on local government bodies know the effect upon children's education when parents come on to compensation. Many hon. Members have signed those forms and know that they are very objectionable. I would ask hon. Members to consider this matter in relation to a child's life. At 11 plus it sits for an entrance examination, and then goes on to a secondary school for three or four years. A substantial sum of public money will be spent on the child's education. Then the parent may get injured and ask for compensation.


The child gets no payment; that will be the position under the Bill. The result may be that the expenditure for three or four years upon the education of that child, a sum which averages, in our council schools, approximately £40 per annum, will not achieve its object. You may have spent £120 upon the child's secondary school education, and then, because of the injury to the parent, you have thrown it all away. The child has to leave the school without a leaving certificate, and without having matriculated or having any opportunity to proceed to the higher reaches of education.
I cannot imagine that anybody in this Committee would desire to see a child's education impaired in any way because of a refusal to accept this Amendment. The case that we have been putting applies more particularly to the mining districts because of the higher incidence of accidents there than in other fields of industry, but it is equally true of children related to any industry. The effect is the same. I have no doubt that there is a genuine feeling in the Committee that this difficulty and obstacle to children's education must be overcome. We have stated the difficulty, but unless this Amendment, or words which accept the principle of it, are agreed, a number of children will have their education opportunities jeopardised.

7.35 P.m.

The Under-Secretary of State for the Home Department (Mr. Peake): I had better make clear to the Committee the general position in regard to the Bill and, more particularly, to this Amendment. The Bill comes before the House of Commons as a Measure which has been discussed with representatives of employers and employés and of insurance companies who are interested in workmen's compensation. Those discussions took a long time. The negotiations were somewhat lengthy, but we eventually arrived at what was substantially an agreed Measure. It is obviously within the power of the Committee to upset any of the terms of this agreed Bill if the Committee so desires, but I think, whenever agreed legislation is brought forward, there must be a strong bias in favour of the agreement at which the parties have arrived. The Amendment, as well as the whole subject matter of the Bill, was the subject of discussion

and of agreement with representatives of the Trades Union Congress. I want to say that at the outset, but I do not in any way challenge the right of the Committee, if it so desires, to upset an agreed Bill.

Mr. S. O. Davies: Can we have that matter cleared up? Are the Committee to understand that all the details that now appear in the Bill were agreed upon in negotiations with the Trades Union Congress?

Mr. Peake: All the points of any substance in the Bill have been the subject, not only of discussion, but of complete accord, between the parties with whom the negotiations took place.

Mr. Isaacs: Would the Minister permit me to ask whether, in those negotiations, this point about stopping the payment at this age for the education was actually discussed, let alone agreed upon?

Mr. Peake: Most certainly. This was one of the points on which agreement was, in fact, reached.

Mr. Isaacs: With the representatives of the Trades Union Congress?

Mr. Peake: Yes.

Mr. Isaacs: I happened to be there, and I do not remember it.

Mr. Peake: It certainly was discussed. I do not remember any exception being taken to the proposals for the Bill. I do not wish to shut out the right of the Committee—and I should not dream of attempting to do so for a moment—to make any Amendment which it thought proper, but I would point out that any substantial Amendment would cut across the agreed Bill. The result of any substantial Amendment would be that I should have to enter into further negotiations in order to arrive at an agreement.
With regard to the Amendment, the wording is obviously open to a good deal of criticism, but I do not intend to take up small points on the wording, because hon. Members who have to draft Amendments have not the advantages or the resources behind them of Government Departments. The Amendment, as the hon. Member who moved it described, is divided into three parts. With regard to the third part, relating to those who are
unable to receive such instruction or training by reason of physical or mental infirmity,


that provision is taken from the Unemployment Insurance scheme. I honestly wonder whether representatives of miners, and other members of what are usually known as the working classes, think it desirable that, before deciding whether an allowance should be paid or withheld under the Bill, it is really suitable for an employer or an insurance company to make inquiries as to the physical and/or mental condition of a child. I should hesitate a very long time before I put a right of that sort into the hands of an employer or insurance company to make that sort of inquiry. So much for the third part of the Amendment. Looking at the second part of the Amendment, that deals with persons undergoing training for any trade, profession or vocation, and that, of course, on the face of it, without any limit of age whatsoever, would cover a very wide field. When I was reading for the Bar many years ago, before I became a pupil of my right hon. and learned Friend the present Solicitor-General, there were other students whose ages seemed to vary between 45 and 70, and as far as I can read the provision of the Amendment as it stands, if they had an aged father, they would qualify for children's benefit under the provision.

Mr. Collindridge: Does the hon. Gentleman think that a coalminer would have his son in that capacity while at the age of 45?

Mr. Peake: I have heard of coalminers whose sons were training for the Bar.

Mr. Collindridge: At 45?

Mr. Peake: No, not so old as 45. It seems to me that the part of the Amendment which is deserving of serious consideration is the part dealing with those receiving full-time instruction at an educational establishment. One or two points fall to be considered, and those are the provisions of other schemes which are under the auspices of the State. I have already referred to the provisions under Unemployment Insurance which contain the qualification about bodily or mental infirmity. With regard to Unemployment Insurance, what is laid down is this:
A child between the ages of 14 and 16 cannot be regarded as a dependent child "—

and, therefore, qualify for the children's allowance under Unemployment Insurance—
unless he is under full-time instruction at a day school or is incapable or unable to receive full-time instruction through physical or mental infirmity.
So it would seem, with regard to Unemployment Insurance benefit, that the normal age is 14, and the extension of the period for which the child's allowance can be drawn can go on up to 16 if the child is in receipt of full-time education. Let me observe in passing, what I think is rather important, that in this scheme under Unemployment Insurance the child has to be a dependent child. In this Bill we have sought to keep all tests of dependency outside the scope of the Bill, and we have succeeded; and every child, whether dependent or otherwise, will qualify for the children's allowance.
I have referred to the Unemployment Insurance scheme. Now let me refer to the provisions with regard to the Widows' and Old Age Contributory Pensions Act. The hon. Member for Normanton (Mr. T. Smith) referred to this Act. The provision there is that a widow is entitled to an allowance in respect of children while under the age of 14 and for a further period thereinafter specified at the rate of 5s. a week for the eldest child and 3s. for other children. The further period from the age of 14 specified is the end of July next following the date at which the child attains the age of 16, during which he is, or is deemed to be, in accordance with the Regulations made under the Act, under full-time instruction at a day school. Those are two very good precedents. Since those two schemes were drawn up there has been a further scheme, and that is the Personal Injuries (Civilian) Scheme, under which persons injured as the result of hostile action during the war can be compensated. There again, there is a dependency test. Before a child's allowance can be drawn under that scheme, the child must be a dependent child. As I have pointed out, we have no such provision under workmen's compensation. The interesting point is that in the civilian injury scheme there is no differentiation between the age of 14 on the one hand and the age of 16 on the other. There is the middle course of taking the age of 15 without qualification on either side, and that is the proposal which we have put in this Bill in order to


make its provisions as simple as they possibly can be.
In respect of children's allowances, there have to be forms provided by the employer and filled up by the worker. We have sought to keep the facts which have to be proved as simple as possible, and we have avoided as far as possible any inquiries by the employer into the personal status of the worker. It seemed to us, therefore, that there was a great deal to be said, instead of taking this proposal with the age of 14 with an extension to 16, for taking the middle course of the civilian injury scheme, that is, that the age should be 15 with no provision for inquiries by the employer as to whether or not the child was undergoing education.

Mr. Lindsay: Was that due also to the alteration in the school-leaving age?

Mr. Peake: I should think that in regard to the civilian injury scheme the desire was to keep the thing as simple as possible. It was thought that there would be a large number of civilian casualties. It was desired to get the compensation and children's allowances paid out as quickly as possible in order to avoid hardship, and I have no doubt that the age of 15 was taken for simplicity of administration.

Mr. Tomlinson: Could the hon. Gentleman say whether a scheme of that kind came before the Committee in the form of a Bill?

Mr. Peake: It came before the House in the form of a Bill before the outbreak of the war, and subsequently in the form of a Scheme made under the Act, in respect of which hon. Members were entitled to put down a Motion. Of course, I am not suggesting that the civilian personal injuries scheme has been above all criticism. I am only citing is as a reasonable precedent for us to adopt in the case of employers. It seems to me that there is a great deal to be said for not putting upon employers a greater obligation than the State itself is prepared to assume. The State undertook the liability for children under the age of 15, and that is one of the reasons for having adopted the same proposal in this Workmen's Compensation Bill. If there were a strong feeling in the Committee that hon. Members prefer the ordinary age for children's allowances under workmen's compensation to be 14 with an extension to the age

of 16 where whole-time education was being continued, we would certainly consider introducing an Amendment to that effect in another place, but I should have thought there were strong arguments against that proposal and in favour of the age of 15, that is to say, complete simplicity of administration, and no inquiries by the employer into what the child or children of the injured workmen are doing. Moreover, under the proposal for maintaining the age of 15 without any qualification a large number of injured workmen will be able to draw the allowances in respect of the children, even although the children have gone to work and are bringing money into the home.
From the point of view of the cost of these proposals, I believe it would be cheaper to adopt the normal age as 14 with the extension to 16 where whole-time education is proceeding. That would be a cheaper proposal than the proposal that we have put forward in the Bill, and if hon. Members press the point upon those lines, some alteration in the Bill might, I think, reasonably be made. But I cannot go back to the employers after the long negotiations we have had and say to them, "The House of Commons has decided to place a large additional burden upon your shoulders." [HON. MEMBERS: "Large?"] A substantial burden. The proposal in the Amendment would put a very substantial additional charge upon workmen's compensation. If hon. Members pressed for the words of this Amendment, and it were carried, our agreed settlement would, in my view, be upset.

7.50 p.m.

Mr. James Griffiths: The hon. Gentleman made the point that the Bill is the result of very prolonged negotiations, in which some Members on this side of the House have taken some part. I am entitled to say for my hon. Friends that when we first came into these negotiations we raised the three points which are contained in the Amendment, and we have raised them continually since. The hon. Gentleman cannot make any charge of bad faith against us. We confine our Amendment to the very points which we have raised at the meetings. What we have pressed for, and what I think the general sense of the House was agreed upon a long time ago, was that there


should be a drastic overhaul of the whole of the Workmen's Compensation Acts. The Government, long before the war, met that demand by setting up a Royal Commission. We had to content ourselves with a Royal Commission, which was given very wide terms of reference. The Commission might now have completed its report but for the war. It is only because it would be impossible for it to bring in a report now, and because, at the same time, the circumstances of the war are pressing very heavily on the dependants of disabled men, that we have this Bill.
The employers and insurance companies are getting off very cheaply. But for the war they would have been faced, not with this Bill, but with a comprehensive Workmen's Compensation Act. The Under-Secretary knows that this leaves grave anomalies in the original Act, which are quite unjustified. Last Thursday I mentioned two of them. The first was the method which has been imposed upon workmen's compensation for calculating the average earnings of men while they were engaged in industry. There the men have been robbed of something which the original Act intended to give them. Then there is the partial compensation system, whereby their compensation is reduced because of wages that they have not received at all. I do not think that we need be very tender with the insurance companies, because they have done very well out of this Bill. So have the employers. I am never convinced by this talk about the enormous charge of workmen's compensation upon industry. I know that the charge of workmen's compensation on industry in South Wales, onerous as it may be, is less than the cost on earnings.
I believe it is possible to meet this question of preventing an educational career being wrecked by a disabled man's misfortune. An accident to a man in the prime of life is a misfortune anyhow. The whole life of a man who contracts silicosis, for example, is wrecked. We cannot do much for him except provide compensation; but why should his misfortune wreck the career of his child, as it will unless some such provision as we propose is made? No hon. Member would like to think that the secondary school career of the child of a disabled man is wrecked for want of such a provision. The Under-Secretary has made a fair

point in saying that the terms of this Amendment are very wide; I admit that at once, but the real case that we want him to meet is that of a child whose educational career might be interrupted. The age of 16 is a very important one in secondary school life. That is the age when children generally matriculate. That is the completion of the first stage. If the child has to leave before that age, the first stage is broken. There are many employers who lay down that they will take a child into their employment if he has matriculated, and I believe I am right in saying that the Royal Air Force lay matriculation down as one of the conditions for a commission. Therefore, I make this suggestion. Cannot we make sure that the child of a disabled man will not be compelled to leave a secondary school before the age of 16? The Under-Secretary has put forward the suggestion that we might make 14 a basic age, and continue the payments to 16 if a child continues at school receiving instruction. Is it not possible to retain the age of 15, as it is provided in the Bill, and to put forward the age to 16 in the case of a child remaining at school. I can understand the anxiety of the Government to see that these schemes compare with one another. At present they are in an awful mess. The Under-Secretary referred, for example, to the personal injuries scheme. He said that the age there is 15. But may I remind him of the difference between the rates provided under that scheme and those provided in this Bill?

Mr. Peake: There are two parts to the personal injuries scheme, as the hon. Gentleman well knows. The earlier part is for short-term injuries, and is comparable to workmen's compensation. The rates there are exactly the same as in this Bill. The other part applies only to long-term disability, extending beyond six months.

Mr. Griffiths: I should have made that clear; I beg the hon. Gentleman's pardon. But there is provision made in that scheme for the case of men who are permanently disabled. Here, however permanent and total the disablement may be, there is no further provision made.

Mr. Peake: Children wider the civilian injuries scheme have to be dependent. There is a dependency test in that scheme which we are not providing in workmen's compensation.

Mr. Griffiths: I do not think that there is much in that. The allowance for which we are asking is in respect of the child dependent on its parents in attending a day school until 16. I would make a suggestion, which I am sure would be the desire of the Committee, that provision should be made to meet the type of case that we are urging to-night. It may involve further negotiations, but I urge the Under-Secretary to put it before the employers and the insurance companies, as I think they ought to meet a point of this kind.

Mr. Peake: May I take it that the hon. Member speaks for some body of opinion in this Committee? I wish he would give the view of himself and his hon. Friends as to the desirability of making provision in respect of physical or mental infirmity.

Mr. Griffiths: I am speaking for myself when I say that if the hon. Gentleman would meet the educational point, I believe that we would be prepared to "call it a day."

8.1 p.m.

Mr. S. O. Davies: All that we have had from the Under-Secretary is a proposition that we should bargain with him. He has been very frank, and says that if we bargain with him, we lose. If we accept the maximum age of the child as being 14, and if we could possibly have a compromise by having the age fixed at 16 where the child is undergoing full-time education, obviously such a compromise would be a loss, generally speaking. We cannot consider that for a moment on this side of the Committee. We notice that the Under-Secretary has been looking over Government schemes which might perhaps be exploited to his advantage in putting up a very weak case this evening. There are other Government schemes in which children are treated far more generously than the hon. Gentleman proposes to treat them in this Bill. I want to make a correction, first of all. He refers to the Unemployment Insurance benefit terminating at 16, but there is running parallel with that benefit the unemployment assistance allowance. Whenever it is to the advantage of a person in recepit of unemployment benefit to avail himself of the scale laid down by the Unemployment Assistance Board, he is legally entitled to take advantage of that scheme. The

position under the Unemployment Assistance Board is that a child between 14 and 16 years of age is entitled to 6s., and if the dependant is over 16 years of age he is entitled to at least 8s. So on that score the Under-Secretary is not correct and is unconsciously misleading the Committee.
I tried to make an appeal very late on the night of the Second Reading of the Bill that he should consider the position under the Royal Warrant. On the one hand, you have a disabled workman, disabled as a result of war service, and, on the other hand, you have a disabled workman, disabled as a result of industrial service. The position is that under the Royal Warrant the first child receives 6s. 3d., and the second and all subsequent children receive 5s. each, and there is nothing in this Bill comparable with that. My hon. Friend the Member for Normanton (Mr. T. Smith) mentioned the age of 16 but there are all the qualifications laid down in the Royal Warrant that are laid down in this Amendment. I say that without having had anything to do with the drafting of the Amendment. This is what the Royal Warrant says:
Allowances for children shall ordinarily terminate at the age of 16, but may exceptionally be granted or continued after that age where it is shown … that the child:—(i) is an apprentice or in an analogous position receiving not more than nominal wages, or is being educated at a university, or technical or secondary school; or (ii) is incapable of self-support by reason of infirmity … and that the pecuniary circumstances of the family or child are such as to require it.
The rates laid down even in this improved compensation Bill will place the family of every injured workman in a very singular position. The hon. Gentleman put it to us whether we would consider it suitable for an employer to inquire whether any child has physical or mental infirmity. The working class to-day are getting so used to inquisitions of all kinds that I do not think they would rise against even an inquisition such as is suggested here if it meant some easement of the position of the injured worker and his family. I hope that the hon. Gentleman will consider the appeal that is being made to him, although, speaking for myself, I would not be satisfied nor would, I believe, my hon. Friends, if he were to fix the age of 16 for children undergoing full time education. I know too well what happens in


so many of the industrialised areas of this country where a very substantial proportion of the children pass from the elementary to the secondary school. In my own constituency approximately 25 per cent. of these children have done so. It will be some encouragement to the workers of this country to realise that at least the law with regard to workmen's compensation is at any rate tending in the right direction. The hon. Gentleman is not establishing any new principle. It has been laid down in other schemes by the Government far more generously than what we are asking from these benches to-day. I come from an area where, wisely or unwisely the working men and women have made a kind of fetish of education. I do not propose that we should try to disillusion them if they have made a mistake. That condition is as alive to-day as it ever has been, and it is a terrible experience when a decent workman is injured after having concentrated his life upon keeping a home together and giving the best education possible to his children. Surely on that basis there should not be placed before Parliament a scheme which is so unkind and so ungenerous as this Bill. I appeal to the hon. Gentleman to raise the age now to 16. If he does so, he can rest assured that at the first opportunity we shall come along and ask for more, as he would naturally expect.

8.11 p.m.

Mr. Isaacs: I want to remind the Minister that this, as it stands, is a compromise and that this question of children's allowances turns on the 5s. advance given to injured workmen. It is a most unsatisfactory sum, but it was accepted as a compromise. I think we should be willing to withdraw the Amendment if we could get the educational side of it accepted on the basis of 15, continuing to 16 where necessary. I want to refer to the question of the dependent child, and I want to submit that a child of 14 to 15 who is working is a dependent child. Not one of them earns enough to maintain himself or herself. In the conversations we have had with the hon. Gentleman we have been impressed by his knowledge of the question, and his honest and sincere desire to meet us, but he did say that he could hardly go to the employers and tell them that the House of Commons has increased the cost.

Mr. Peake: To the extent proposed in the Amendment.

Mr. Isaacs: If that can be qualified, I am confident that the hon. Gentleman need not worry about telling the employers. I am also confident that employers are not always so bad as they are sometimes painted and that this is a cost so small that they will not "grouse" about it. I appeal to the Minister to let the Bill stand, with the extension up to 16. If he does so, then I think we shall be happy to withdraw the Amendment.

8.13 p.m.

Mr. Peake: We have had a friendly and useful discussion on this Amendment, because it has elicited agreement on the fact that it would be undesirable, generally speaking, to have any inquiry by employers on the question of the physical and mental condition of children. That, at any rate, clears that part of the Amendment out of the field of discussion, and I think the Committee is generally agreed that the second part of the Amendment would open up an unreasonably wide field. The discussion has, therefore, narrowed itself down to the point as to whether we either have the basic age at 14, with extension to 16 where a secondary education has been undergone, or, alternatively, the age of 15 with a similar extension to the age of 16 in the case of those undergoing full-time education. I have explained to the Committee the position in which I am, namely, that this is agreed legislation. The hon. Member for North Southwark (Mr. Isaacs) challenged my statement that this was one of the points discussed with representatives of the T.U.C.

Mr. Isaacs: I understand that the question of children's allowances was discussed, but I do not recall any discussion about limiting it.

Mr. Peake: I have refreshed my memory as to the course of our discussion. This was not a point which was discussed at great length, but the representatives of the T.U.C. have had the original Bill before them since the middle of April, and we went through the Bill line by line. They took no exception whatever to the proposal in the Bill, and therefore I think I am justified in saying that this was a matter on which we reached agreement. I do not want to quarrel with the Committee, but, on the other hand, I do


not want to promise them I can achieve agreement on something about which I am not sure that agreement is possible. I do not want now, by a concession, to make hon. Members more voracious. It is perfectly obvious that by going to the parties with a long list of demands the prospects of agreement would be less, but what I am prepared to do in regard to this Amendment, if it is withdrawn, is again to discuss with the employers whether they are prepared to make this limited concession in regard to whole-time education up to the age of 16. I cannot promise that I shall reach agreement, but I shall certainly use my best endeavours; and if agreement is reached, an Amendment can then be introduced.

Mr. J. Griffiths: I would like to thank the Under-Secretary for his reply and say that. I think my hon. Friends would be prepared, in view of his undertaking, to withdraw the Amendment. I am sure that when he meets the employers, insurance companies and parties concerned he will say that the request has the full support of every Member in the House to-night and is a House of Commons request.

Mr. Isaacs: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.18 p.m.

Mr. T. Smith: I beg to move, in page 2, line 4, at the end, to insert:
(2) Where any workman was on or after the eighteenth day of March, nineteen hundred and forty, entitled to a weekly payment by way of compensation as aforesaid and such compensation was redeemed before the coming into operation of this Act, the foregoing Sub-section shall apply to him as though he were still entitled to such weekly payment.
You will remember, Sir Dennis, that it was 18th March this year when the Government first intimated that there would be some temporary legislation dealing with this subject. Since that time a good deal of discussion has taken place, both in this House and between the various parties, and we are now in the middle of July. This Amendment is put down in order to safeguard the position of certain injured workmen, and I will quote a case which is the real reason why the Amendment is being moved. In Section 13 of the principal Act an employer can, where compensa-

tion has been paid for total incapacity for more than six months, apply for redemption of those weekly payments, and what is to be taken into account in determining the amount of redemption is laid down there. It also states that redemption can take place by agreement and also by arbitration. I hope the legal profession will not go out of the Committee while we are discussing this Amendment, especially the right hon. and learned Gentleman the Solicitor-General, whose guidance I would like on this point. I am told by some hon. Members that they have not heard of any cases since last March where insurance companies have urged or tried to get redemption. On the other hand, I am told by other hon. Members that there have been attempts to get redemption, and I will now quote a case which clearly proves the necessity for this Amendment, although, out of respect for the solicitor and the man concerned, I do not propose to mention names or places.

Mr. Peake: I hope the hon. Member will name the place, at any rate.

Mr. Smith: I will give an outline of the facts of the case. A workman lost one eye. For some reason he got no compensation. He went back to work at the same place and, unfortunately, last the other eye and is now blind, the most terrible affliction that one can have. He was in receipt of 25s. 10d. a week compensation for total incapacity. Although he himself consulted a solicitor on 15th April, almost a month after the announcement that there was to be amending legislation, the insurance company served on him a notice applying for arbitration. Perhaps I had better read what the solicitor said:
However, I was very surprised when the client's wife came in to see me on the 15th instant and handed to me a notice of a request for arbitration and an appointment there-for which had been served on her husband personally on that day.
If the original Bill which was brought before the House had been in operation, say, from March, it is calculated that the 25s. 10d. would have been increased by about 11s. When the case had got to court the judge would have been bound to take into account, not the 11s., but the 25s. 10d. As I understand it, he does not take into account what Parliament might do. He has to deal with


what the law is, and he would be compelled to take into account only the 25s. 10d. In ascertaining the lump sum, I am told by this solicitor that, whereas the 25s. 10d. would carry with it something like £800, if this Bill had been in operation at that date the figure would have been between £1,100 and £1,200. So in the case of this poor blind man there was a question of £400 floating about. I believe most insurance companies and employers try to play the game, though I know some who do not. There are men on these benches, including myself, who at one time in our coalfields had absolute hostility towards the indemnity companies. I was pleased when the principal Act of 1923, which was consolidated in 1925, at least safeguarded redemption to some extent. What did they do? They said to a poor man permanently incapacitated by nystagmus, "Would it not be better if you took a lump sum and started in some business, going round as a greengrocer or opening a fish and chip shop? What about taking £15, or £25?" I know cases where we have actually had to threaten men to stop them accepting such terms as that. It is rather different to-day when a totally incapacitated man is safeguarded by Section 13. This is an example of what an unscrupulous insurance company can do and if this was the only case in the country—I believe there are some more—it would be worth while for this Committee to safeguard it.

Mr. Peake: In what way does the hon. Member claim that there was a wrongful invocation of rights given to the employer by the principal Act?

Mr. Smith: What the company did was certainly within the law, but my point is that they applied for redemption in April because they knew that, if they waited until this Bill became an Act of Parliament, they would have to pay £300 or £400 more.

Mr. Peake: Every year there is a certain number of settlements under Section 13 and in some cases, where an employer goes bankrupt or a company goes into liquidation, a settlement has to be made by law. I should like the hon. Member to give me some evidence that some employers or companies have invoked Section 13 where they would not

have done it in the ordinary course. I do not think he can expect employers to forgo the use of procedure which is perfectly normal and proper in a great many cases simply because an announcement of new legislation is made.

Mr. Smith: I think that in this case the insurance company applied for redemption, because they knew that, if they waited another six months, they would have to pay more. Of course, they would not admit it. They would say they had followed out the ordinary course and taken advantage of the Act of Parliament, as they were entitled to do. I believe this instance could be multiplied. I have not heard of many cases in my area, but hon. Friends of mine have told me of attempts to get redemption. This case has been handed to me because the Amendment was down. I believe the man who wrote it to be perfectly honourable, I believe the facts are correct, and I honestly feel that we ought to give some kind of guarantee to men who are totally incapacitated as laid down in the Amendment. If the Amendment is not drafted properly, for heaven's sake do not imagine that laymen are the only people who make mistakes in drafting. I remember a case in which the House had to adjourn between half-past eight and nine o'clock and meet the next day because a word in a Regulation had been misspelt. That was not done by a layman on these benches. If the Amendment is not drafted properly, I should like the Under-Secretary to give consideration to the purpose of the Amendment and give effect to it in another place. It would not cost the employers much, and it would be a great advantage to some poor people.

8.30 p.m.

Mr. Oliver: I appreciate the point made by the Under-Secretary of State that if there had been no Bill contemplated, there would have been settlements under Section 13 of the Workmen's Compensation Act, but during the last few days I have taken the trouble to ascertain whether there have been any manifestations of undue haste to obtain redemptions because of the knowledge that this Bill was likely to be passed within a few days. I have made inquiries, and I think there is rather overwhelming evidence of many cases where redemptions have taken place which would not have


taken place had this Measure not been in prospect.

Mr. Peake: Under Section 13?

Mr. Oliver: I will quote from a letter which the Under-Secretary of State will be able to check himself. I agree that it is not conclusive, but I think it will give sufficient evidence to show that there was undue haste. The letter comes from Manchester; it is written by a firm of solicitors, John Whittle, Robinson and Bailey, and it is dated 27th June, 1940. The letter reads:
In further reference to this matter"—
that is, a redemption matter—
and as you are aware, the judge, on the adjourned hearing at Blackburn County Court, ordered redemption of the compensation in this case, and fixed the figure at £868. As you are aware, the application for redemption was commended on behalf of the employers"—
They are the only people who can institute proceedings. The workman cannot do so; he may agree, but he cannot institute proceedings—
and we were bound to represent your member at the hearing, and we asked that the judge should take into account the probability of an increase in compensation which is contemplated by the Workmen's Compensation (Supplementary Allowances) Bill. The judge found that he could not do this, and, therefore, your member has to be content. The judge ordered that each side should pay their own costs, and we enclose note of our charges, which we trust meets with your approval.

The Solicitor-General (Sir William Jowitt): Was that a case of permanent incapacity?

Mr. Oliver: It must have been, as I think this paragraph from the letter will confirm:
In this case, as it happened, the date of the first hearing was your member's birthday, and the employers even took advantage of this. Had the hearing been fixed for even a day before your member's birthday, he would have been entitled to £889 16s. 8d., but because he was 53 on the date of the hearing he was only entitled to £869. If we may say with respect, we consider the employers"—
I think he might have said the insurance company—
have treated this man very unkindly, to say the least of it. He is practically blind, and has now been compelled to live on a lump sum instead of his 30s. per week. The employers commenced their application for redemption a very short time after the Workmen's Compensation (Supplementary Allowances) Bill had been ordered to be provided

by the House of Commons, and it would appear that they were trying to redeem before your member was entitled to any increase in compensation.
I readily confess that this is not conclusive, but I think it makes a very strong prima facie case. If inquiries are made, I think it will be found that this insurance company did manifest undue haste merely to get the settlement before this Bill becomes an Act. The Under-Secretary of State said that he had come to an agreement with the employers and the Trades Union Congress before the Bill was introduced. If the Bill were made retrospective to approximately the time at which it would have become law in the normal process, this case would practically have been covered.

Mr. Peake: Does the evidence show whether the case to which the hon. Member has referred was one of a married man, a single man, or a widower?

Mr. Oliver: I am afraid I cannot say, although I have read the whole of the information that I have. The Under-Secretary will appreciate that the redemptions of this character mean that the lump sum is of an amount which requires an immediate life annuity to bring in approximately 75 per cent. of the 30s. Instead of enjoying 30s. a week, the man will have a sum equivalent to only 75 per cent. of that, because it is the invariable experience that employers do not redeem until they are perfectly satisfied that there is not a scrap of work left in the unfortunate individual. Therefore, it is not unreasonable to ask that this Clause should be made retrospective to the date which is suggested. In these cases, the lump sum settlements of an elastic character are generally arrived at by agreement, but when the employer invokes Section 13, one may rest assured that there is not much likelihood of the man concerned returning to work. For this reason, I hope the hon. Gentleman will accept the Amendment.

8.38 p.m.

Mr. Peake: I should like to say a few words about the Amendment, because there may be some misunderstanding about it if I do not intervene. The Amendment appears to cover lump-sum settlements of all kinds, because it says:
Where any workmen was … entitled to a weekly payment by way of compensation as aforesaid and such compensation was redeemed before the coming into operation of this Act. …


I take it that the hon. Member for Normanton (Mr. T. Smith) is aware that lump sum settlements are redeemed in two ways under the Workmen's Compensation Act—under Section 23 by agreement between the parties, and under Section 13 by compulsion on the initiative of the employer. There are something like 26,000 lump sum settlements every year by voluntary agreement, and only a few hundred at the most by compulsion under Section 13. I cannot see any case whatever for applying a provision of this kind so as to upset settlements arrived at by voluntary agreement, and I think I shall carry the hon. Member for Normanton with me in that.

Mr. T. Smith: Yes.

Mr. Peake: I am much obliged to the hon. Member. That clears away the greater part of the cases of lump-sum settlements. Our attention is, therefore, directed to only a few hundred cases a year under Section 13. Section 13 deals in two ways with two different classes of case. It provides that in either case the disability must have lasted for six months, and where that disability is permanent the lump sum to be paid to redeem it is calculated by a purely mathematical formula. That is to say, the lump sum has to be an amount required to purchase a Post Office annuity equal to 75 per cent. of the amount of the weekly payments. The second class of case dealt with by Section 13 is where incapacity is not of a permanent character. In that case, although the employer may still apply for compulsory redemption, the amount payable has to be settled by arbitration, and the result of that arbitration is completely binding. Neither party is free to reject the findings of the County Court judge. One of the reasons why the employers are slow to invoke the powers given under Section 13 is that county court judges do not lean very much in favour of employers or insurance companies. In any case it is a matter of arbitration and not a matter of purely mathematical calculation. The employer is taking substantial risks in invoking compulsory powers of Section 13. The amount is absolutely at large, and the arbitrator can find for any amount he thinks to be reasonable.

Mr. Oliver: Can he exceed the 75 per cent. as a life annuity?

Mr. Peake: Yes, the amount is absolutely at large. He has to consider the age of the workman and the probable future course of his disability. I should not have thought myself that it would have been a reason for upsetting the arbitration, that the arbitrator had taken into account that there was the prospect of increases being granted in workmen's compensation. Therefore, the field of discussion is narrowed down to this, namely, whether employers or insurance companies have made wrongful or excessive use of their powers of compulsory redemption on the Post Office annuity basis. The hon. Member for Normanton cited a case where a man had lost an eye and subsequently lost the other eye. It is a sad case, but it is almost an old friend. It is the same case which was mentioned by his, and my, hon. Friend, the present Parliamentary Secretary to the Ministry of Agriculture, in the Debate of 30th April. The hon. Member for Don Valley (Mr. T. Williams) gave the case of a person who met with an accident and suffered injury to one eye, but did not claim any compensation. He continued to work, and then met with another accident in which his other eye was injured. He sought compensation and is now totally blind. That case is apparently the only case which the hon. Member for Normanton can now cite. But I asked the Parliamentary Secretary to the Ministry of Agriculture to furnish me with full details of that case, and I am sorry to say that I am still waiting for them. The hon. Member for Normanton has quoted a letter, written on 15th April, and I should have liked to have known the sequel, namely, whether the case in fact went to court, or whether a settlement under Section 13 was arrived at.
I have made some inquiries as to whether Section 13 has been used excessively since 18th March. Let the Committee bear this point in mind. On 18th March we announced legislation, but it was not the legislation now before the Committee. It was legislation of a much more limited character, because the only beneficiary was then a married man. That is why I interrupted the hon. Member for Ilkeston (Mr. Oliver) and asked him whether he knew the slants of the man he was quoting. If he turned out to be a single man, there would be nothing "fishy" about the business. I have


made some inquiries as to whether there has been evidence of improper or excessive use of Section 13. It is obvious that there are cases where Section 13 is properly invoked, and there are cases where that Section has to be invoked under the law. I have consulted a number of county court registrars, particularly in the coalmining areas. I have consulted 10 registrars with very large areas where coalmining and other heavy industries are carried on. In the case of seven out of the 10 there has not been a single case of the use of Section 13 since 18th March last, and in the areas where it has been operated the registrars all say there is no evidence whatever to show that employers or insurance companies have been making more use of it during the past five months than they have done in similar periods before. As I have no evidence that this power has been abused in any way, it seems to me to be quite unnecessary to put an Amendment in the Bill. The hon. Member for Normanton agrees that his Amendment would be unsuitable. It would require a different Amendment; but there is no evidence of mischief under Section 13.

Mr. Oliver: Can the hon. Gentleman acquire that evidence?

Mr. Peake: I can assure the hon. Member that it is very easy to acquire, and had I found that in the last five months there were numbers of cases springing up in all places, it would have been clear that the employers and insurance companies were trying to take advantage of their knowledge of the coming into operation of the new conditions.

Mr. Oliver: In the case where awards have been made by the Courts should not the Under-Secretary compare the corresponding months of last year, because I am sure that there are many courts in this country where in the course of two months there has not been a single case under Section 13?

Mr. Peake: I have told the hon. Member that it is clear that Section 13 is either not being operated at all, or has not been operated expressively in the last five months. There has been no abnormal increase, and there is nothing to show that employers or insurance companies have taken advantage of the knowledge that new legislation was going to be introduced.
The position is that the cost of commuting cases under Section 13, on the Post Office annuity basis, is so great that the ordinary employer or insurance company prefers to take the risk of going on with the weekly payments. For example, in the case of a workman of 35 whose weekly payment is 30s. they would have to pay £1,200 to take the case off their books. Generally speaking, employers and insurance companies would rather take the risk of a case terminating in some other way, by recovery or death of the workman, than to pay large sums on the Post Office annuity basis. If hon. Members can refute the evidence which I have and can convince me that Section 13 has been abused during the last five months, I am prepared to consider an Amendment to meet the position. At present I have no evidence, although I have done my best to obtain it. I have invited the Trades Union Congress and other bodies to provide it, but I have so far not received it.

Mr. Lunn: During the hon. Gentleman's speech he said the county court judges did not usually lean towards employers and insurance companies. Has he evidence of that?

Mr. Peake: All I meant was that my experience of county court judges was that they were scrupulously fair to the workpeople and did everything in their power to protect the interests of the one whom they regarded as the weaker party.

8.51 p.m.

Mr. Ness Edwards: The Under-Secretary has told us the result of inquiries about Section 13, but he has made no reference to inquiries about Section 23. In coal-mining districts Section 13 is never invoked. I have not known of a case. Our experience is that the mutual indemnity societies employ full-time agents who are allotted certain areas, and who go round regularly every three months, and, by one means or another, induce workmen to commute their weekly compensation. I have a suspicion that in the last six months that has been intensified. I know of one man who made an agreement three years ago having lost an eye. He went before the county court judge and got him to turn down the agreement. That man has been seen three times by the indemnity society since the introduction of the first Bill. That case is symptomatic of the general policy of


the mutual indemnity societies in endeavouring to inveigle our people into accepting commutations. I know a man who has been on compensation for 10 years and has been declared by the medical referee to be permanently disabled. He was offered £200 odd, and because he refused it, he was served with notice of review in the county court. Answers were put in, but before the case was heard the company came along and again offered the £200 plus additional compensation. We have to decide whether we can take the risk of losing a certain £200, or of going before the judge and taking whatever he may award by way of confirming the compensation or reducing it. I would like to know whether the Under-Secretary made extended inquiries to find out whether mutual indemnity societies in the coalfields have been intensifying their efforts to obtain commutations in view of the extra cost that will fall upon them because of this Measure.

8.54 p.m.

Mr. Peake: The hon. Member for Normanton (Mr. T. Smith) appeared to be in complete agreement with me that we cannot reopen the cases of agreed settlement on a voluntary basis. After all, it is not only the employer who has had knowledge of the new legislation. The employé has similarly known about it and has had the advantage of being advised by his trade union officials, his solicitor or his approved society. I have not the slightest doubt that in such cases, where lump sums have been agreed upon, the prospect of the new legislation has been taken into account.

Mr. T. Smith: The kind of voluntary agreement I had in mind is not the kind which my hon. Friend the Member for Caerphilly (Mr. Ness Edwards) had in mind. The cases I had in mind were those where a trade union, acting on behalf of the injured workman, had made an agreement with the insurance company and both sides were satisfied. I agree that there would be a difficulty in reopening such cases, but where pressure has been brought upon the man to accept something when he is entitled to much more the cases should be reopened.

8.56 p.m.

Mr. Silverman: Voluntary agreements are in a different

category from redemption awards under Section 13. The Under-Secretary said that there were 26,000 voluntary agreements in a year. I think a large proportion are cases in which the workman is not represented, either because no trade union was concerned, or because there was no legal representation.

Mr. Peake: Is the hon. Member saying that out of 26,000 injured workmen who accept lump sums very few are members of trade unions?

Mr. Silverman: I did not say that. I said that of the 26,000 cases there was a large proportion in which the parties were not members of trades unions and a large proportion in which there was no legal representation. I do not know how seriously the hon. Gentleman doubts that, but it is true that there is a considerable proportion of what he is pleased to call voluntary settlements, in which the workman is not advised by anybody. In those cases the insurance company or the employer would have been, in the last two or three months, in a favoured position in the sense that they would have been fully conscious of the contemplated legislation, whereas the workman would not have been conscious of it at all. It would have been easy for the hon. Gentleman to find out how many cases under Section 23 had been settled in the past few months because in each case the agreement, if it had been validly obtained, ought to have been recorded in a county court. The same machinery that gave him his statistics of redemption awards under Section 13 would have been available to him for voluntary agreements under Section 23. It would have been interesting, either from his point of view or from mine, to have been able to ascertain whether the fact that there were no excessive numbers of cases under Section 13 is paralleled by any excess of cases under Section 23. I suspect that the information he would have obtained would not have been the same in the two cases.
One would also have liked to know whether, during the relevant period, there were an unusual number of applications to review and of notices to terminate compensation or to reduce it under Section 12. That is another favourite trick of the insurance companies, particularly where men are not represented or advised by trade union secretaries or lawyers. The employer is entitled to serve notice under


Section 12, and at the end of 10 days to reduce compensation or terminate it and take his chance that the workman will accept it and will not go to court and ask for arbitration. This is frequently done in cases where the insurance company desires an end of the case, desires a lump sum settlement, but does not desire to proceed under Section 13. It puts the workman into a difficult position. In the meantime he has nothing, and the temptation to accept the lump sum, however inadequate, is very great, and I should be greatly surprised if during the last few months there had not been an increase of cases of that kind.
I dissent from the view that these cases can properly be called voluntary agreements, in such a sense as to distinguish them from cases under Section 13, where, after all, there has been a judicial investigation and a judicial award. If there were a sufficient number of these cases to which Section 13 applied—that is, in which there had been a full judicial review—I should have thought the argument was all the stronger for reviewing the so-called voluntary cases in which the agreement was reached on the basis that one party to the bargain knew what was coming on and the other did not.

9.2 p.m.

Mr. J. Griffiths: I do not want to go into the points which have been dealt with by my hon. Friends. We know perfectly well that the difficulty arises, not in cases that are redeemed, but in cases that are settled in the manner described. I have always discouraged lump-sum settlements, and I hope that when we come to deal with workmen's compensation in a more comprehensive manner we shall take stringent steps to save men from settling disability claims for trifling sums. Cases have been cited by the hon. Member for Normanton (Mr. T. Smith) and the hon. Member for Ilkeston (Mr. Oliver) and there may be other cases, and if evidence is submitted of other cases which are assumed to have been voluntarily settled but which were not, I hope the Under-Secretary will look further into the matter.
I am thinking at the moment of a particular case in my own constituency—and similar cases may have happened elsewhere. Coal seams have been worked out

and a colliery company goes into voluntary liquidation. There may be a number of men, either partially or wholly disabled, who have had claims against it. Others who have been working in the pit and who fear the onset of, say, silicosis will, naturally, take the precaution of discovering whether they have claims, because they will have to make their claims before the company is wound up, otherwise their chance would be gone. As soon as the company has gone into voluntary liquidation, a receiver is appointed whose task it is to collect all the assets and to distribute them. Immediately the receiver is appointed weekly payments are stopped. I understand that it is a perfectly legal action, because the receiver has to realise all the assets and get together all the debts, and to pay out in accordance with the financial position, and the men get no weekly payment of compensation until the whole process of winding up the company is complete, and then they get lump sums. What happens to the cases of men who have not had lump-sum compensation and have not got payments? Are they entitled to a reconsideration of their cases under this Bill? That is one case; other hon. Members may have cases of a like kind, perhaps in other industries. The point is that this process is going on, and I hope that the Under-Secretary will look into the matter.
What is the position in cases of that kind? These men are compelled to commute their weekly payments, both full and partial, into lump sum settlements because the company has gone into voluntary liquidation. In some cases the sums have not been paid, but are in process of being negotiated. Are those men entitled to secure some advantage in that case? It would be very unfair indeed if, by sheer accident, these men were deprived of whatever advantages this Bill will bring forth. If the Under-Secretary finds that a case has been made out by us, will he undertake to consider it and, in another place, put in a suitable Amendment? If he will undertake to do so, I ask my hon. Friends to submit to him in full any cases they may have, so that he can investigate them.

9.6 p.m.

Mr. Peake: The hon. Member has raised a rather intricate point about voluntary


liquidation. I do not follow his statement that a workman on compensation loses his weekly payments as a result of the appointment of a liquidator or receiver.

Mr. Griffiths: I understand that, once a receiver is appointed, the weekly payments are stopped and commuted to a lump sum, and that the lump sum will be paid afterwards.

Mr. Peake: I cannot understand the cessation of weekly payments if the employer is insured. We are speaking of the coal industry, and in that industry insurance has been compulsory since 1934. By Section 4 of the Workmen's Compensation Act, where an employer has entered into a contract of insurance, in the event of the employer becoming bankrupt or the firm being wound up, the rights of the employer, in relation to insurance, are transferred to and vest in the workman. Upon such transfer, the insurers have the same rights, and are subject to the same liabilities, as though they were employers. Therefore, it appears that the rights of the workman are maintained against the employer.

Mr. Griffiths: The hon. Member knows that there is no absolute obligation upon the employers to insure. The absolute obligation is that they must either insure or make their own provision as a company. The position in the case I mentioned is that provision was made independently by the company.

Mr. Peake: I am much obliged to the hon. Member. In the case of the employer who is completely uninsured and is under no legal liability to insure, upon his bankruptcy or liquidation, a lump sum has to be ascertained automatically under Section 13, a procedure which has already been the subject of discussion. I said earlier that the Amendment on the Paper could not for obvious reasons be accepted. The hon. Member for Nelson and Colne (Mr. Silverman) argued that we ought to provide for certain cases of voluntary agreement. I would represent the difficulty of providing, by legislation, for certain people who have not been represented by a trade union, and of leaving out those persons who happen to be members of a trade union. It is obviously a distinction that it is impossible to draw.

I asked hon. Members for definite evidence of the abuse by the employers of Section 13, but so far I have not been much impressed by the individual cases tendered to me. I will look at the matter again, but what I have so far heard—I am always ready to change my mind if fresh evidence is brought forward—does not incline me to favour the inclusion of an Amendment in another place.

Mr. T. Smith: In view of what has been said, I beg to ask leave to withdraw this Amendment. I feel bound to say, however, that I think the discussion has been worth while.

Amendment, by leave, withdrawn.

9.10 p.m.

Mr. Peake: I beg to move, in page 2, line 29, at the end, to insert:
Any reference in this Sub-section to the average weekly earnings of the workman before the accident shall be construed, in a case where the amount of the weekly payment is increased as a result of a review under Subsection (2) of Section eleven of the principal Act, as a reference to the weekly sum which he would probably have been earning at the date of the review if he had remained uninjured.
The purpose of this Amendment is to maintain the position of certain young workmen, under the age of 21½, whose wages would have increased automatically had they remained uninjured. We found when we came to examine the drafting of the Bill that the over-riding maximum of seven-eighths was applied to the workmen's pre-accident earnings, and it would obviously have been a hardship in the case of a workman of 16, whose wages were, say £1 a week, if at the age of 19 he could receive by way of compensation only seven-eighths of his pre-accident earnings.

9.11 p.m.

Mr. Ness Edwards: I desire to associate myself with this Amendment, but I also want to draw the hon. Gentleman's attention to the very curious anomaly that he is creating. He is limiting this Amendment to Sub-section (2), which provides for a review where a minor is involved, but he does not provide for the same equity in reviews under Section 11 Sub-sections (1) or (3). Where you get a change of physical circumstances and the workman applies to the county court for an increase in his partial compensation and succeeds in obtaining an


increase in his partial compensation, we do not provide the same remedy for him as we provide for the minor. I hope that the hon. Gentleman is following the point. I had better make it quite clear. There are three or four types of cases which can be reviewed. First, there is the case of the infant. At any time up to the age of 21, or within six months after reaching the age of 21, he can apply for a review of his position with a view to establishing a rate of compensation which is related to the earnings which he might have got had he not been injured. You are providing in this Amendment that his allowances shall be increased in accordance with the increase in his compensation. That is simple and straightforward. But take the case of a workman who was injured during a period when intermittent work only was obtainable. His pre-accident average earnings were low as a result. Then there is the period of six months in which work is regular and his wages have risen. If they have risen by 20 per cent. above his pre-accident average, he is entitled to go to court and get a review of his compensation.

Mr. Peake: Perhaps I could shorten the discussion on this point by saying that nothing in this Bill interferes with the right of the workman to proceed under Section 11, Sub-section (3).

Mr. Edwards: But the hon. Gentleman expressly provides that any adjustment in the compensation of an infant shall be reflected in the allowances, though he does not provide in this Bill that in any review under Sub-section (1) and Sub-section (3) those alterations in compensation shall also be reflected in the allowances. It seems that, because it provides expressly for the infant, or minor, to get this review and allowances, that automatically excludes others from getting increased allowances. I submit that this is a very curious anomaly, which will deprive some workmen of getting equity, and I suggest that the Under-Secretary might see whether it is not possible, in another place, to insert alterations.

The Chairman: Would not the hon. Member agree that what he has said does not really apply to this particular Amendment, and that, therefore, his remarks would come better on the Motion, "That the Clause stand part of the Bill"?

Amendment agreed to.

Further Amendments made:

In page 3, line 7, leave out from "shall," to "be."

In line 8, leave out "those," and insert "supplementary."—[Mr. Peake.]

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

9.17 p.m.

Mr. Tinker: There is one matter which I would like the Under-Secretary to clear up in connection with the part of the Clause dealing with partial incapacity cases. The Clause says:
in the case of partial incapacity, to seven-eighths of the difference between the amount of the said average weekly earnings of the workman before the accident and the average weekly amount which he is earning or is able to earn in some suitable employment or business after the accident.
The language is rather complicated. We have had the benefit of listening to the Under-Secretary giving us one or two examples. I thought that he might have given those examples on Second Reading, so that they would have been on record. I want to mention an example which, I think, I followed correctly. Take the case of a workman whose average weekly earnings before the accident were £3 a week. His compensation will be £110s. Suppose that he has two children. The supplementary allowance will be 5s. for himself and 4s. for each of his children, making a total, if he is totally incapacitated, of £2 3s.
He gradually recovers, and is found to be fit for light employment. He gets a job at £2 a week. His partial incapacity compensation under the present Act amounts to 10s. That makes his total income £2 10s. As I understand, he is now entitled to the fraction which his earnings constitute of the total—that is, £2 a week, as against £2 10s., making, with his added compensation, four-fifths of his supplementary allowance. Four-fifths of the supplementary allowance works out at 10s. 4d. That, added to the £2 10s., makes £3 0s. 4d. That is in excess of his pre-accident earnings; and it is obvious therefore that that amount will not be paid to him. As I understand, from the explanation which was given, he is now entitled to seven-eights of the difference between £2 10s. and £3. That in this case would mean 8s. 9d., so that


he would be drawing, when on light work with the added supplementary allowance in the case stated, £2 18s. 9d. That is as I understand it from the Under-Secretary, and if I am right, I want confirmation from him, because this is very complicated to the ordinary layman. It takes a long time to explain the effect of this proposal. I have had to go over it several times myself, and when I have been asked to explain the position, I have begun to wonder whether I have been right or wrong. I would like the example quoted to appear in the OFFICIAL REPORT, so that it may be a guide to anybody who may meet with this difficulty. I put the case forward in order to get the matter cleared up and confirmation or otherwise from the Under-Secretary.

9.21 p.m.

Mr. Ness Edwards: I, too, am interested in this part of the Clause and would ask the hon. Gentleman whether or not the formula of "partial compensation over the full, multiplied by the allowance over one" is the simple formula for ascertaining the amount of allowance to be paid in partial compensation. Is not that about the simplest formula one can find for arriving at partial compensation? In Sub-section (4) provision is made for the amount of allowance to be paid in excess of concurrent amounts of weekly payments, such as, for example, where a man is drawing two amounts of partial compensation on account of two accidents received at entirely different periods. You have there the overriding consideration of the seven-eighths of the pre-accident average or the seven-eighths of the loss of earnings in the case of partial incapacity, but where there are two accidents the seven-eighths of each pre-accident average is to be taken. Is it the seven-eighths of the pre-accident average or the loss of wages on the first accident or seven-eighths of the loss of wages on account of the second accident, or is it to be the higher amount? It seems to me that we are providing a very meaty case that will keep the lawyers busy for a long time. Words should be provided to make it clear that, where there are two accidents, each pre-accident average or each set of loss of earnings, must be taken for ascertaining which seven-eighths over-riding figure is to govern both amounts of partial compensation when added to-

gether in these cases. This is an exceedingly intricate thing, and I am afraid that we shall all be paying a lot of money to solicitors, perhaps much more than we shall get out of these concurrent payments.

9.24 p.m.

Mr. Peake: The hon. Member has put me a conundrum which I do not think any senior wrangler could possibly explain. He told us that you want to multiply or divide some other fraction by something over one, but my recollection, from what I learned of mathematics, of the effect of putting something over one, is that it did not make much difference to it.

Mr. Edwards: I thought the position was very clear. I do not know whether the "over one" has upset the hon. Gentleman, but the point is that it is laid down here that the amount of allowances in partial cases must be in the same proportion as the amount of partial compensation is to the full.

Mr. Peake: The hon. Member has now explained the situation with very great clarity.

Mr. J. Griffiths: Without honours.

Mr. Peake: In the case of a man totally disabled you take the full amount of the allowance, the 5s. flat rate for himself, 4s. for the first two children and 3s. for each subsequent child. In the case mentioned by the hon. Member for Leigh (Mr. Tinker) there would be 5s. for himself and 4s. for each of the two children, making a total of 13s. That is what he would get in the event of total disability whatever his weekly payment worked out at under the Act. In order to ascertain the supplementation he receives, in the case of partial disability you ascertain the proportion between the weekly payment under the principal Act for partial incapacity and the weekly payment for total incapacity. In the case cited by the hon. Member the man had a total disability pension of 30s. a week and earned £3 a week before his accident. After the accident he earned £2 a week so that the weekly compensation is half the difference between the pre-accident and post-accident rate of earnings, that is to say, 10s. In order to ascertain the proportion of the supplementation, of the 13s., due to him, you take his partial compensation


of 10s. and find what fraction it is of the total compensation of 30s. It is obviously one-third and therefore the proportion he gets is 4s. 4d.
That brings the position to this: He is earning 40s. and gets 10s. weekly payment under the principal Act, making an income of 50s. and in respect of his flat rate increase and two children, he gets a further 4s. 4d., making a total weekly income of 54s. 4d. as against his pre-accident earnings of 60s. If he had a big family he might get up to the overriding maximum which in his case would be seven-eighths of the difference between his pre-accident and his post-accident earnings. Seven-eighths of £1 is 17s. 6d., so this man's over-riding maximum in supplementation would be 17s. 6d. a week which, with his post-accident earnings of 40s., would make a total of 57s. 6d. If he had a family of between five and six children he would attain this overriding maximum of 57s. 6d. I hope I have satisfied the hon. Member?

Mr. Tinker: No, the hon. Gentleman has not. As I understood it, the fraction was the earnings on night work, added to his partial compensation, which would make 40s. as against 50s., or a fraction of four-fifths, and he was entitled then to four-fifths of his supplementary allowance.

Mr. Peake: I am afraid the hon. Member has it wrong. The fraction of the supplementation which you apply, is the fraction which represents the proportion between his partial disability and total disability rate, which in that case is one-third.

Mr. Tinker: I hope the hon. Gentleman will meet some of us and get the point cleared up, because we are entirely at variance as to what he said and what he is telling us now.

Mr. Peake: I will certainly communicate with the hon. Member and make the matter as plain as I possibly can, but he will find that the overriding maximum in the case of total disability is seven-eighths of the pre-accident earnings and, in the case of partial disability, seven-eighths of the difference between pre-accident and post-accident earnings. In the case that he has cited the total income will be 57s. 6d.

9.31 p.m.

Mr. J. Griffiths: I agree with my hon. Friend that this is the kind of point on which lawyers can have a very happy time in future. Was this interpretation which the hon. Gentleman has given now agreed upon in the discussions to which he has referred?

Mr. Peake: Certainly.

Mr. Griffiths: In this case, the pre-accident average was £3 per week and the compensation 30s. The man went back and earned £2. Therefore the full difference between the pre-accident and post-accident earnings was 20s. and under the principal Act he was entitled to half of that, which is 10s. In addition, now he is entitled to a proportion of these supplementary allowances, and the proportion is found by finding out the proportion between full and partial compensation. In this case it is very simple. The full compensation is 30s. and the partial compensation is 10s. If the proportion is a third, or whatever it is, that is the amount of the allowance that he gets in the same proportion, subject to the overriding consideration that the partial supplementary cannot be more than seven-eighths of the loss of earnings. The loss of earnings is £1 and therefore in this case the supplementary allowances can be seven-eighths of 20s. It is very desirable that we should get an agreed interpretation of the Clause because we shall shortly have to work it. I gather that what I said is the official interpretation.

9.35 p.m.

Mr. Ness Edwards: I agree that the interpretation which the hon. Member has just given is the one that was generally accepted throughout the negotiations, but the point about which I am concerned is which seven-eighths of the loss of earnings are to be taken as the overriding consideration when there are two concurrent payments. I am referring to Sub-section (4), where there is a reference to two concurrent weekly payments. Both those payments are covered as far as allowances are concerned, but invariably the loss of earnings is different in these cases, and it is important that we should know which is to operate as the overriding consideration.

9.36 p.m.

Mr. Peake: I am afraid this is a very complicated matter, but I will give the


hon. Member such information as I have about the operation of this Sub-section where there are two or more concurrent payments of workmen's compensation. I am told that it is possible for a man to be in receipt of three payments of workmen's compensation. Sub-section (4) deals with the special case which some- times occurs when there are two accidents. In such cases the man is entitled to the appropriate supplementary allowances in respect of each weekly payment, subject to a proviso that the aggregate of such allowances is not to exceed the maximum allowances payable under Sub-section (1), that is to say, the 5s. flat rate and the appropriate children's allowances. You apply the seven-eighths overriding maximum to each set of allowances taken separately, but not to the sum of both.

Mr. J. Griffiths: Would it be possible for the Under-Secretary to produce a White Paper, or something of the kind, in which these things would be worked out very clearly? The Bill will shortly become an Act, and we shall have a great deal of difficulty in understanding what is meant.

Mr. Peake: I will get into consultation with the Compensation Committee of the Trades Union Congress.
Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.
Clause 2 ordered to stand part of the Bill.

Orders of the Day — CLAUSE 3.—(Requirements as to furnishing of information.)

9.38 p.m.

Mr. Peake: I beg to move, in page 6, line 3, after "statement," to insert "or representation."

This is a drafting Amendment.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clauses 4 and 5, ordered to stand part of the Bill.

Orders of the Day — CLAUSE 6.—(Provision with respect to schemes applying to workmen suffering from silicosis and certain other industrial diseases.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

9.39 p.m.

Mr. Ellis Smith: I should be lacking in my duty if I did not express the gratitude of the pottery industry and the workpeople I represent to the Government for having inserted this Clause in the Bill. The Clause will bring increased benefits to many men and women who are now suffering from silicosis in that industry, and the same thing applies to many miners and asbestos workers. I should like to ask one or two questions.
The Clause states:
subject to such adaptations, modifications and exceptions as may be contained in the scheme.
We have pressed for modifications many times during the past few years, and, seeing that this Bill is improving benefits, I wish to ask whether the Secretary of State, or the Home Office are contemplating further modifications in the administration of the Workmen's Compensation (Silicosis and Asbestosis) Act, 1930. This marks a great step forward as far as benefits are concerned. But is it intended, when this Bill becomes an Act of Parliament, to introduce Regulations—which the Secretary of State is entitled to do—as a result of Clause 6 being included in this Bill, and which incorporates the Workmen's Compensation (Silicosis and Asbestosis) Act, 1930, in the light of our experiences in the last 10 years? It states at the beginning of this Clause:
This Act shall apply in relation to workmen entitled to compensation.
One of the difficulties we shall have, under this Clause, is to prove entitlement. Is it proposed, when this Bill becomes law, to put a broader and wider interpretation on entitlement than has been the case in the past?
The other day I drew the attention of the Secretary of State to a very fine report published by the International Labour Office as the result of examination and research made into the question of silicosis. That report is in the Library and ought to be read by Members interested in industrial diseases, and particularly in silicosis. In that report we have the benefit of many years research carried out by medical men who have specialised on the question of silicosis. Therefore I wish to ask the Under-Secretary whether, under this Clause, it is the intention of the Secretary of State,


when introducing Regulations based upon this Clause, which includes the 1930 Act, and entitles him to adapt and modify in accordance with that Act, to introduce Regulations which will be the natural consequence of the passing of this Bill in order that we may improve the position of pottery workers, miners and asbestos workers, who suffer so much from these deadly industrial diseases of silicosis and asbestosis?

9.43 p.m.

Mr. Goldie: I also should be failing in my duty, in sitting for a purely industrial constituency, if I did not pay my tribute to the Government for introducing this Bill. It is more or less an agreed Measure, and as a representative of an area which is almost entirely working class, I can say that it will bring untold benefit to my constituents as well as those of the hon. Member for Stoke (Mr. E. Smith). Curiously enough, I was detained yesterday and could not be here until late in the evening, because I was engaged in a silicosis and asbestosis case. In the course of that case I have learned more about the difficulties from the point of view of the workmen than I have ever done before. It is only right that I should say that I was appearing in a professional capacity for the employer. In my experience it was the first case I have ever known in which an attempt—I am not using that offensively—was made to deal with an asbestosis case as a breach of the Factory Act. Instead of the workmen's compensation business going forward, an attempt was made, and perfectly rightly, to bring the matter within the provisions of the Factory Act. The workman found himself at once in this difficulty, that even if he was suffering from asbestosis, which the photographic evidence showed he was not, and even if the place was a factory, it was not a factory within the provisions of Statutory Rule 1104, because certain processes were not being carried on there. That is to say, though men were working on waste asbestos, because the processes specified in a particular Statutory Order were not being carried on there, it was impossible for the workman to proceed because he could not bring himself within the statutory regulations. I agree with the hon. Member that when silicosis and asbestosis are inquired into, it might well be a question for consideration whether it is desirable that the processes

specified in the Statutory Rules should be exactly those which occur under the provisions of the Factory Act. I am certain that every working man and every employer who is anxious to do his duty by his workmen will welcome this Bill, and I give it my cordial support.

9.47 p.m.

Mr. Tomlinson: I am pleased that Clause 6 has been introduced into the Bill and that the Bill is to apply to silicosis and asbestosis. There is another disease which has not been fortunate enough to be incorporated in the Bill. I refer to bysinosis. It is another form of "nosey Parker," and it is an industrial disease which we have in Lancashire.

The Deputy - Chairman (Colonel Clifton Brown): I am afraid that it is not in order for the hon. Member to discuss diseases which are not in this Clause.

Mr. Tomlinson: We have had a promise, and I am asking whether this Bill will be, not retrospective in this case, but prospective. A promise has been given to include in a Bill to be brought before the House the agreement which has been entered into. It will come under the Act of Parliament which is referred to in the Clause inasmuch as it will form part of the Silicosis and Asbestosis Act. I would like to know whether bysinosis will be included when the agreement is worked out.

9.48 p.m.

Mr. Peake: In reply to the hon. Member for Stoke (Mr. E. Smith), it is not the intention of this Clause to compel or to permit the Home Secretary to undertake a general review of all the provisions of schemes made under Section 47 of the principal Act or under the Silicosis and Asbestosis Act, 1930. The purpose of the Clause is to see that the supplementary benefits given by this Bill are extended to those schemes, subject to any suitable modifications which are required seeing that the conditions governing the receipt of benefits under those schemes are not identical or on all fours with the conditions laid down by the Workmen's Compensation Act.

9.49 p.m.

Mr. J. Griffiths: I am much obliged to the hon. and learned Member for Warrington (Mr. Goldie) for his remarks.


Coming from him with his wide experience they will carry a good deal of weight, and I hope that what he has said will be noted. I represent an area which has half the silicosis in the country. I should not be doing justice to the people among whom I have been brought up if I did not support the Clause. I was lucky enough to get out of the pit, but the generation which worked with me 30 years ago are now almost gone. Men who were boys at school with me were taken off in the prime of life. We are not saying much about it, but there is going on a special investigation into the problem of silicosis among coalminers. It is a very thorough investigation, and I should like to pay a tribute to those who were appointed by the Medical Research Council to conduct that investigation. They have been working in South Wales. I want to express our gratitude to those men, men of great ability, great scientific attainments and with a great sense of public service, who are bringing first-class scientific minds to bear on this problem. For the moment we are quiet because we want them to have full time in which to make their investigations. Of course we hope there will be no undue delay, and that no time will be lost in bringing out their report, and when that report does come to hand the first thing to do will be to end the use of the absurd term silicosis. Men are now contracting all sorts of chest diseases from the dust. There is a new phrase for it, a very long one which I hardly dare trust myself to pronounce—pneumokoniosis.

Mr. Goldie: May I suggest chronic bronchial catarrh?

Mr. Griffiths: I would just say "chest diseases" and end it there. When that report comes forward we must really consider the whole matter and end this absurdity of silicosis. With that I leave the matter, again expressing my thanks to the hon. and learned Member for Warrington.

9.52 p.m.

Mr. Ness Edwards: Like the hon. Member for Llanelly (Mr. J. Griffiths) I come from an area which suffers very badly from silicosis. After his constituency I think mine is the next worst. The type of silicosis which affects our men is of a

milder type, and the result is that the majority of our men are on partial compensation and have been for a long time. That partial compensation has been determined upon a very low average of earnings and while we have the right under the main Act, a right which is now being exercised, to apply for a review, we have not provided in this Bill that if a review is made there shall be a corresponding increase in the allowances. I would beg that that point be considered in another place with a view to getting the matter put right.

Mr. Peake: I may explain that this Clause only extends the benefits of this Bill in general terms to the other schemes. The details will be embodied in those schemes as a result of discussions between the interested parties.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Clause 7 ordered to stand part of the Bill.

Orders of the Day — CLAUSE 8.—(Short title, construction, commencement and extent.)

9.54 p.m.

Mr. Tinker: I beg to move, in page 7, line 27, to leave out from the word "shall" to the word "nineteenth" in line 28, and to insert:
take effect as from the first day of July.
What we are asking for in this Amendment is that the date shall be moved backwards from 19th August to 1st July. The result of that would be to benefit the recipients of supplementary allowances by seven weeks pay. Under ordinary conditions one would not dare to put forward such a proposition, but there is a little history behind this Bill. For a long time efforts were made to get the Government to do something for the workmen and after a time we prevailed, and a Bill called the Supplementary Allowances (No. 1) Bill got its Second Reading on 30th April. If that Bill had been passed it would have operated from the 1st July of this year, and that is the basis of our claim that this Measure should operate from that date. That Bill did not get as far as has this Bill. Then has been some added benefit in this Measure, but for all that, many of our people, knowing that we were agitating for something for workmen's compensation, have been living in hope that something would be given to


the injured workman as from 1st July. Wherever we go, we are asked whether Parliament is keeping its promise about what it was told would come into operation on 1st July.
I ask the Committee to consider the position in that light. It is recognised that the injured workman has for some time deserved a higher rate of pay. If the negotiation has somewhat delayed its coming into operation, no one would wish to say that the injured workman should suffer because we have been trying to get an improvement. Because we have been trying to prevail upon the Government of the day to see the strength of our argument, no one would say that that delay should cost our men seven weeks' pay. That is what, in effect, it means.
I do not see any good ground for refusing our request. The Under-Secretary may reply by saying that it would be difficult to trace back on the books who was entitled to the payment, and that there would be many complications and so many difficulties that the Amendment would not be worth the trouble it would cause. I tell the Committee that the employers have a record of every man injured, the date of his injury and the amount of compensation, and that the insurance companies know the position exactly. There will be no question of trouble in going back to 1st July. We may be met with a second argument, that there have been many discussions, as a result of which the insurance companies and employers have been prevailed upon, on the understanding that this would be an agreed Measure. I hope that that argument will not be brought forward. I hope we can satisfy the Committee that we have established a case for justice for injured workmen and the consensus of opinion has been obtained that nothing should stand in the way of justice because of an agreement arrived at between those interested. When we remember the long period of suffering of the injured workman and the smallness of the recompense we ask, this change of date ought not to be refused.
I make an urgent appeal to the Under-Secretary. I cannot say any words of reproof to him, as I have nothing but admiration for the way in which he has handled the situation. I gave him that meed of praise on the Second Reading, and I do not retract it now. He has done his work very well indeed. I hope

that he will now push aside whatever little objection he may have, and will say that he has been so impressed with the case that has been made out that he will give way here. If he did so, it would give a great send-off to the Bill. We are all pleased that the Bill has arrived at this stage. I earnestly appeal that this concession be given to our injured workmen on 1st July. I make that appeal in the interest of justice, and I hope that the Under-Secretary will give way on the point.

10.0 p.m.

Major Milner: I desire to support very strongly the eloquent and human appeal which has been made by the hon. Member for Leigh (Mr. Tinker). In common fairness, the Government, I think, must meet this situation in some way and fix the date at 1st July. We all know that had it not been for the important circumstances of the war, this Bill might not have been brought in for some time. The war has now been in progress for something like 10 months, and, having regard to that fact, the little increase that has been made and that undoubtedly is of some help is somewhat belated. Wages in industries have been put up. Men in receipt of workmen's compensation have been living alongside those in receipt of quite substantial wages, and they have had to suffer accordingly. As everyone knows, prices have gone up, and it seems to me that it is a reasonable request that the date at which these supplementary allowances should be made should be fixed at 1st July.
Of course, there are other considerations. I would remind the Committee, whose support I am sure the hon. Member for Leigh would wish to enlist, that when the Home Secretary wished to introduce the original Bill, which was as long ago as 30th April, he himself then placed on record the urgency of the matter. He pointed out that there had been no comprehensive review of workmen's compensation since the Holman-Gregory Report of 1920. He said that the work of the Royal Commission had been interrupted, that some valuable time had been lost, that so long ago as 30th January the Government had entered into discussions, and that so long ago as 18th March he had outlined the provisions of the Bill which he brought in at that time.


It is now 25th July. All those months, and I might almost say years, have passed since this matter was first ventilated.
Largely, we on this side hope and believe, owing to the influence brought to bear by the Lord Privy Seal and the general change in the Government, the Government very properly, if I may say so, brought forward this new Bill, which goes a long way to meet the request which has been made on so many occasions in this Committee. It does not seem that there can be any practical difficulty in accepting the proposal of the hon. Member for Leigh. There is no difficulty about the matter of records and no difficulty whatever, in my experience, in the employers or the insurance companies making the appropriate payments. Indeed, the Home Secretary, in the speech to which I have referred, said that he had had many helpful and useful discussions with accident office associations and that the associations were ready to pick up old cases and meet them even when the employer had ceased to insure, and so on. The Home Secretary said that he also was anxious to bring the Bill into operation at the earliest possible date. There can be no insuperable and practical difficulty in existing cases in making the small additional payments which would be due and dating them back to 1st July if my hon Friend's proposal were adopted. I very much hope that no petty—if I may use the first word which comes to my mind—suggestions or arguments or, as my hon. Friend put it, "conventionalities," will stand in the way, and that the Government will willingly accede to the request made by my hon. Friend.

10.5 p.m.

Mr. A. Jenkins: I would like to support the appeal which my hon. Friend the Member for Leigh (Mr. Tinker) has made. It is of importance that we should keep our word, and that the Minister should keep his word. The speech referred to by my hon. and gallant Friend the Member for South-East Leeds (Major Milner) was made by the Minister on 30th April. He then made out a case for the increased payments. The important thing to remember is that the new Bill, in its present form, will not involve a greater cost to the employers than the old one.

Mr. Peake: The hon. Member is quite wrong. It will cost a substantially larger sum.

Mr. Jenkins: I have not been able to see where the increased cost will arise.

Mr. Peake: The increased cost arises in this way. Whereas under the old Bill only married men were to get the 5s. flat rate advance, under this Bill everybody, married or single, man or woman, will obtain that 5s.

Mr. Jenkins: I accept the Minister's point that there will be an increased cost. But, apart from that, there was an undertaking given that the increased payments would operate as from 1st July. It has been said widely in the country, and the general impression is, that the payments will begin on that date. It seems that, under this arrangement, the employers are going to save seven weeks' payments.

Mr. Peake: Under the Bill as it was originally introduced, only married men would have obtained the supplementation, and, therefore, nobody has any right to be disappointed at the Bill not coming into operation until 19th August, except the married men.

Mr. Jenkins: But they are interested to a very large extent. The point is that had the Bill in its present agreed form been accepted in the first place, these payments would have been operative as from 1st July. That was the impression given to the country. The recipients of compensation are not responsible for the differences we had in this House. The point I want to make—and the Minister made it better than I am making it, in his speech on 30th April—is that the increased payments are long overdue. The Minister talked about the long delay, and the investigations that had taken place into the need for this increase. He admitted the real point. Now he takes away seven weeks of those payments because of our failure to agree on the first Bill. People receiving compensation should not be made to suffer as a consequence of our failure to agree. Seven weeks is an important matter. An hon. Member said earlier that there has been an increase in the cost of living. The difficulties of these people have been increased. I hope that the Minister will be prepared to agree to inserting the date which was originally intended.

10.9 p.m.

Mr. Peake: It would be a pity for the Committee to proceed to discuss the Amendment under any illusions as to what it does. It proposes to substitute for 19th August as the date on which this Bill comes into operation, 1st July. I very much doubt whether Parliament has ever passed a Bill at the end of July which is to become operative at the beginning of July. It seems to me a very novel proposition.

Mr. J. Griffiths: This is a novel Parliament, and this is a novel Government.

Mr. Peake: The Bill says:
This Act shall come into operation …
and the Amendment goes on to name a date which is already nearly four weeks past. I am not sure that the hon. and gallant Member for South-East Leeds (Major Milner), who is experienced in the law, appreciates what this Amendment does. Under this Bill not only are all future accidents to be met with increased rates of compensation, but there is to be an increase in compensation in the case of every accident which has occurred since 1st January, 1924. As hon. Members know, employers cover their liabilities to their workpeople under workmen's compensation by means of insurance, and they pay in each year a premium which is calculated to be commensurate with the liabilities then existing upon them. If Parliament comes along and increases the rate of benefit in respect of accidents which have occurred in the past, Parliament will be placing upon employers burdens against which they have had no opportunity whatever of insuring themselves or providing for in any way. That is what Parliament is doing, and it is to that course that the employers have agreed, and I may mention in passing that none of the Bills introduced by the Labour party in the last five or six years for increasing workmen's compensation were of a retrospective character such as this one is. Hon. Members want to go beyond that and to make it retrospective not only as regards the dates of the accidents, but as regards the dates of payment as well.
It is obvious that whatever we provide in this Bill, some period must elapse after it has passed through all its stages in both Houses of Parliament to allow of administrative arrangements being made

whereby children's allowances can be fully calculated and paid out smoothly and without any difficulty at some future date. When the original Bill was before the House the insurance companies told me that they must have a period of four weeks after the Bill had gone through during which the forms which have to be prescribed under Clause 3 could be noted, circulated and despatched; the method of operating the Act could be explained to the wages clerks who have to check the forms; and the necessary arrangements made for the calculation of the children's allowances. When this Bill came forward after the other Bill was dropped, I again met representatives of insurance companies, and I said, "I am very anxious to get this Bill operating as early as possible. Cannot you possibly shorten at all the time of four weeks which you demanded in respect of the previous Bill?" They said that they thought they could make the necessary arrangements if they had three weeks between the Bill passing into law and the first weekly payment. The 19th August is a little more than three weeks' grace, and it is possible as a result of the discussion we have had here that some Amendment may be necessary in another place. If so, the Bill will have to come back here again, and nobody can say precisely when the Act will get the Royal Assent. Already, it seems to me, there may be some difficulty in maintaining 19th August as the date of operation. It is clear that whatever happens we cannot make payments as from a date which has already passed.
What the hon. Member has in fact proposed is that about the third week in August employers, in making up their weekly pay tickets to compensation men, should add something in respect of the seven weeks which will have elapsed since 1st July. He wants every man who is on workmen's compensation on 19th August, or who has been on workmen's compensation at any time between 1st July and 19th August, to receive some additional bonus about the third week in August. That obviously is a matter of considerable administrative difficulty. The average period for which a man remains on workmen's compensation is only six weeks, and it is calculated that two-thirds of all cases go back to work within a month. It therefore follows that there will be few in receipt of compensation on


19th August who were on compensation on 1st July, and it means, in respect of any man or woman who has been on compensation between these dates, that a broken period has to be calculated. There are approximately 100,000 persons on workmen's compensation at the present time, and probably 80,000 of those who will be in receipt of compensation on 19th August will not have been in receipt of compensation on 1st July. Those in receipt of compensation on 1st July will be an almost completely different class of persons from those in receipt of compensation on 19th August, and it means that in calculating a man's compensation rate in respect of a short period one has to apply the appropriate fraction of supplementation. It involves a tremendous lot of administrative trouble.
The hon. Member for Pontypool (Mr. Jenkins) said there would be great disappointment throughout the country if this was not done. He said that everybody expected that the new benefits would come into operation on 1st July. I must confess that the hon. Member for Leigh (Mr. Tinker) has been very fair about this proposal, because he said in the Second Reading Debate:
It is quite common for us Members of the Labour party, when we see our constituents, to be asked, 'When are we to get this benefit to which we understand Parliament has agreed?' They"—
and there he means his constituents—
do not understand Parliamentary procedure, and many thought that, as the Bill passed its Second Reading it had become law. They did not realise that we held the Bill up in order to get something better. Now they are disappointed and they hope it may operate as from 1st July."—[OFFICIAL REPORT, 18th July, 1940; col. 550, Vol. 363.]
Let us have no recrimination about the past. I do not know who the hon. Member referred to when he said "we." [HON. MEMBERS: "The House of Commons."] I myself did very little to hold up the previous Bill. When he spoke of "we" holding up the Bill, I think he must have referred only to a certain geographically situated section of the House. However, let us come to the practical issue of who has the right to be disappointed and to what extent. The only persons whose expectations have been at all aroused by the previous proposals were married men. Single men may have been gravely disappointed by

the limits of the previous proposals, and so may all the women, but surely the hon. Member for Leigh and the hon. Member for Pontypool can go to their constituencies and say, "Look what all you single men, and you women, have gained as the result of the withdrawal of the previous Bill." I am even going to try to reassure the hon. Member for Pontypool so far as married men are concerned. He can say to them, "It is true some of you have made a little sacrifice, but we have procured something for you also; you will have an additional 1s. in respect of each of your first two children." Therefore the hon. Member has a complete answer if he is charged with having obstructed the previous Bill in the House of Commons. In any case I could not accept the Amendment. I should regard it as a breach of faith of a serious character with those with whom I have negotiated the Bill. It would place upon them not only a great administrative but also a serious financial burden.

10.21 p.m.

Mr. Collindridge: I have joined with others in the past in paying tribute to the hon. Gentleman. He has on many occasions met us privately and explained the difficult portions of the Bill, but we cannot be pleased with any generosity that he has displayed on this occasion. Does he think that, had the war not been on, we should have been supporting such a Measure as this? I feel that we shall have to take serious action on the Amendment. The hon. Gentleman has outlined administrative difficulties. I was connected with mining before I came here, and I know there was docketed every accident we had, not only those which received compensation but those which did not, and we shall find no difficulty whatever, assuming we get this Amendment through, in these payments being made. While we might question what the hon. Member for Pontypool (Mr. Jenkins) has said, that there is no improvement in this Bill as compared with the first, if the war is to continue for any length of time, insurance companies and employers will be paying less by this Bill than they would be with a full and comprehensive Compensation Act which insured workmen are entitled to. I hope all sections of the Committee will press the Government to accept the Amendment.

10.25 p.m.

Mr. J. Griffiths: All the arguments which the Under-Secretary has made against the Amendment on grounds of the administrative difficulties which it would involve can easily be destroyed. The important consideration which he has put to the Committee is that it would be a breach of an agreement which he has made if he accepted the Amendment. I realise that he cannot break that agreement, and I do not ask him to do so, but I appeal to him to consider whether he could not go to the people with whom he made this pact and ask to be relieved of it. It may be that the date of 1st July suggested in the Amendment would not be possible, but surely there would be no difficulty in fixing some date earlier than 19th August.

10.27 p.m.

Mr. Ness Edwards: I take a different view from that expressed by my hon. Friend the Member for Llanelly (Mr. J. Griffiths). I can understand the Under-Secretary wishing to stand by an agreement which he has made outside, but I cannot understand the Committee agreeing to its authority being contracted out. The great insurance companies have said, "We agree to these things only provided this date is fixed." I am not prepared to agree to the authority of the Committee being contracted out in that manner.

Mr. J. Griffiths: I understand the agreement was not only with the insurance companies. If it were with them only, I should feel differently about the matter, but I understand it was with others as well.

Mr. Peake: Let me make the position clear. The question of the date was one of the most important questions discussed with the Compensation Committee of the Trades Union Congress. On that Committee there was represented, and represented in a binding way, the Mineworkers' Federation of Great Britain. We discussed the question of date very fully, and complete accord was reached that 19th August was fair and proper, and indeed the earliest date at which these proposals could be brought into operation.

Mr. Ness Edwards: As a matter of fact I was a member of the National Executive of the Mineworkers' Federation which has been deeply concerned about this problem. As far as the Mineworkers'

Federation of Great Britain is concerned, it has never agreed to this date; we were pressing for a much earlier date. Apart from that, I accept that the T.U.C. sub-committee may have agreed with the other people; but I wish to put the other conception. The Under-Secretary has to consider not only what the T.U.C. sub-committee feel about this matter. There has been a very great feeling throughout the country. The Under-Secretary will remember that was asked to approach the then Secretary for Mines about this question when a strike was threatened in one of the largest coalfields in the country. We were given the impression that something was going to be done, and we had a conference in the coalfields in January last year, and we told the workers that the Government were going to tackle this problem. But we are now told that the Government are trading on the loyalty of our men. They are not treating them in a decent way, and attending to their injustices, but relying on their loyalty to the country. The Under-Secretary has an opportunity of rectifying a thing of which he himself has complained. He will recollect that a number of years ago he made an outstanding speech, and the miners had some regard to that speech, made in difficult circumstances. He said that wages were too low, but what he has to remember is that the compensation now paid is based upon wages which he himself said were too low.
This is an attempt to try and rectify that position. Men have been asking us for nine month's what we are doing about it but it seems that this difficulty only arises in connection with industrial workers. Everyone else can get what they want and what they ask. The civilian injury scheme and the pension scheme can go through this House without difficulty, but workmen's compensation has to drag on for eight months. Now the workers are to be told that they will have to wait until August because of some administrative difficulty. One could have understood it if the Under-Secretary had said that he understood the difficulty and the injustices which these people have been suffering and asked whether there were no means for meeting them in some way. After all, it is not very much they are asking. He himself has said it was a changing personnel and that a very small proportion were on compensation


for over six months. I could understand him saying that there was an injustice and that the Government would try to meet us, but no offer is made to meet the position. I am concerned as much as anyone about the conduct of this war, and I am trying to do my bit in every way; but I do not think that this war should be so conducted as to perpetuate injustices in the case of the worse-off in our community. That is the worst way in which to conduct the war. It is likely to destroy the morale of our people. Here is a way of getting the industrial population solidly behind our war effort. I hope that my hon. Friend will press his Amendment to a Division.

10.36 p.m.

Mr. Tinker: My hon. Friend the Member for Llanelly (Mr. J. Griffiths) has made a suggestion, and I am prepared to back it up. I asked for 1st July with the full consent of my hon. Friends on this side in the hope that we might get it. I realise, however, that we are bound to accept a compromise if we can get one. I want to suggest, in order to get the Bill through without any opposition, that the Under-Secretary should agree to 1st August. The Bill will be passed by that time. Is it too much to ask for a compromise of that kind? I am prepared to risk my position by suggesting that my hon. Friends should follow the lead given by my hon. Friend the Member for Llanelly in this matter.

10.37 p.m.

Mr. Peake: I must say a few words in response to the appeals made to me by the hon. Member for Llanelly (Mr. J. Griffiths) and the hon. Member for Leigh (Mr. Tinker). Even if 1st August were put in the Bill, it would not enable anybody to draw supplementary allowances until at any rate towards the third week in August. Anything else would be quite out of the question. It would be impossible to speed up the first payments before then. The proposal would therefore mean that about the end of the third week in August everybody who had at any time been on compensation on or since 1st August would receive an additional cash payment. I really do not see how that can be justified. It means that many workmen and workwomen who have gone back to work, having recovered from their disability, at higher wages than they

have ever had before, are to be given cash bonuses which they do not require.

Mr. Collindridge: You are going to do that on 19th August.

Mr. Peake: No, that is not so.

Mr. Tinker: Many times in negotiations with employers for increased wages, several weeks have passed before we have arrived at agreement, and there has been no trouble over giving back pay. That is the common way in which we work in wages negotiations.

Mr. Peake: I am saying that on its merits this is not a reasonable proposal. I would remind the hon. Member for Leigh of the Bill in 1938 to which he put his name. It was introduced on 21st June, and the date of its operation was 1st January following, more than six months later. It was a simple Bill to increase the scales of compensation, and not only was it not to operate for six months, but it was not to apply to any cases of past accidents. This Bill applies to all accidents which have taken place at any time in the last 16 years. As I pointed out earlier, against these past accident risks the employers have had no opportunity of protecting themselves by insurance. The additional payments in respect of those accidents are being met by them really as an act of grace. I have persuaded them that to cover only cases of future accidents and to leave all the past cases unmet would create great hardship, would meet no cases of hardship existing at the present time. They have of their own volition agreed to a proposal to make these new supplementations of benefit applicable to all cases which have occurred since January, 1924, where there is existing disability. Apart from the merits of the proposal which I have been arguing, this matter was fully threshed out by the representatives not only of the employers but of the workers. Before I began the negotiations with the compensation committee of the Trades Union Congress I asked them to be perfectly sure that they represented in those negotiations, and were authorised to represent, the Mineworkers' Federation of Great Britain, and that any agreement I made with them would be recognised as binding by the Mineworkers' Federation.

Mr. S. O. Davies: Was not that really tantamount to political blackmail of Members of this House? I resent it very strongly.

Mr. Peake: Certainly it was not blackmail. It was assuring myself that any agreement which I reached with them did also bind the Mineworkers' Federation.

Mr. Davies: That is the fiftieth time we have had that thrown at us since this Bill was first discussed.

Mr. Peake: I am not throwing it at anyone. I am stating the position. The agreement is recognised as binding on this point, as upon all the other major points of the Bill, not only by the employers but by the representatives of the workers, and I should not feel justified in going back on one part of the bargain and asking the employers to make what is a very substantial concession. The cost of the proposal in the Amendment would be something like £400,000. I should not feel justified, after the very fair and generous way in which I have been met by representatives of the employers, in asking them to reopen the negotiations on that one point. If I were to do so there are other points on which they might press me to obtain further concessions from the representatives of the workers.

Major Milner: Was not the date in the original Bill which was accepted by the insurance companies 1st July? If that was so, surely they are saving a considerable sum as between 1st July and 19th August, even taking into account the additional benefits in the Bill.

Mr. Peake: The arrangement in the first Bill was to pay supplementations in respect only of married men as from 1st July.

Mr. Coffindridge: You did not expect that Bill to go through, did you?

Mr. Peake: I had to make provision for the possibility that it might go through, and consequently I had discussions with the representatives of the insurance companies. Then, they had an opportunity of increasing in advance the insurance premiums to meet the additional benefits. This proposal that the Bill should be retrospective not only in respect of the date of the accident but also of the date when payments begin

would not be a fair one to put up after all the good will I have met with from all sides in coming to the agreement embodied in the Bill. I can hardly go back to one party to the agreement when in our view they have behaved perfectly fairly and reasonably, and when what they have put forward has been generally acceptable to all parties to the negotiations. Of course, if the House of Commons were to choose to carry this Amendment it is perfectly at liberty to do so. No agreement reached outside this House can prevent hon. Members exercising their votes in any way they chose. But it would obviously imperil the passage of the Bill as an agreed Measure. A new Bill would have to be prepared, and a new Bill would not come into operation at as early a date as would the present Bill. I am afraid that I am unable to accede to the request. I think it is a fair arrangement which we have proposed, and I strongly advise the Committee to accept it.

10.46 p.m.

Mr. J. Griffiths: I thought I had met the Under-Secretary. He is quite right, in the position in which he finds himself, but if it is the sense of the Committee that this date should be changed, and if the House of Commons desires this alteration, does the hon. Gentleman not feel that he is entitled to go back and persuade the interested parties to agree to it?

10.47 p.m.

Mr. Buchanan: I ask the Under-Secretary to look at this matter again. I understand that he will accept that short-term accidents should not be covered, but mistakes might be made, and 1st July might apply to persons who had been continually on compensation since that date. It would not mean that they would go back to big wages, but only back to compensation. They would get this retrospective payment. I quite appreciate what it means to enter into an agreement, but from time to time the House of Commons, when it has felt deeply on a matter, has thrown aside more powerful people than those who are parties to an agreement with insurance companies. I have seen the House of Commons turn down cases when they felt that the matter was very serious. The House of Commons in the last resort is more important than any agreement


which has been arrived at. In that case, is there any real breach of faith? I think the Under-Secretary's last remark was extremely unfortunate. He said that if the Committee carried this Amendment we should have to get a new Bill. Who says that? The only body who can say there is to be a new Bill is the House of Commons. Surely it does not mean that if we carry this small Amendment the insurance companies must get a new Bill. I am sure that the Under-Secretary does not mean that, and that nobody who has a sense of politics will accept it. If we carry this small Amendment it will mean that he has still kept his word to the insurance companies, but that the House of Commons, in its wisdom, has tried to get the date made a little earlier. He must go back to the insurance companies and say: "I am sorry that my efforts were not satisfactory, but the House of Commons, in its wisdom, decided otherwise, and in the circumstances you had better accept."

Mr. Peake: Does the hon. Gentleman suggest that a possible via media would be to include only those on compensation?

Mr. Buchanan: Yes.

Mr. Peake: What about the position of the men with lump-sum settlements?

Mr. Buchanan: I will give you my answer. One would have to be a bit unfair; they would not get anything. If a pension were to be paid at the age of 65, a person aged 64 years and 9 months would not get it. All we are doing is to ask you to be a little more generous than you are already. Even with 1st July we are not getting in all the people we want. This is a warning not to be too kind when putting Amendments down. I remember the 1938 Bill. The hon. Member for Leigh (Mr. Tinker) thought that the Bill would get through easier if 1st July were inserted. This warns one not to be too decent. The hon. Member for Leigh, knowing that it was a Tory House of Commons and that the overwhelming mass of people would be against us, thought 1st July would be more reasonable. After the hon. Gentleman has done

with the T.U.C. and the insurance companies, he has to come and satisfy a third body—the House of Commons. Is it too much to ask, having secured the consent of these two bodies, that for the sake of getting unanimity in the House of Commons we should have a compromise? The hon. Gentleman has given the T.U.C. and the insurance companies a compromise. Is it too much to ask that we should share in that compromise? I would say to the Under-Secretary: Give way. The insurance companies will not be "broke." They will get great compensations out of the war. Each day sees trade improving, and their premiums improving considerably. Their position will improve. I ask the Under-Secretary to go back and say, "I had to go to the House of Commons. They had to be parties to the compromise. They are asking for a very small concession, and for the sake of the House of Commons let us concede it." He will not ruin his reputation, but rather will he enhance it.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee proceeded to a Division; Mr. GRIMSTON and Mr. MUNRO were nominated Tellers for the Ayes, but there being no Members willing to act as Tellers for the Noes, The CHAIRMAN declared that the Ayes had it.

Clause ordered to stand part of the Bill.

Bill reported, with Amendments; as amended, considered; read the Third time, and passed.

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Mr. Grimston.]

Adjourned accordingly at One Minute before Eleven o'Clock, until Tuesday next, pursuant to the Resolution of the House this day.